Record-high propane prices add to winter’s wrath

The 2013-2014 winter has been one to remember, with long cold spells broken up by short-lived warm ups. State climatologist Harry Hillaker declared January to have been the 35th coldest January among 142 years of records and exceptionally windy, noting that wind gusts in Des Moines exceeded 40 mph eight days during the first month of 2014.

Key Cooperative’s Denny Carnahan fills a propane tank in Sully.

Unfortunately for many home and business owners trying to stay warm this winter, the extreme cold weather has kept the demand for propane at record high levels at a time when propane supplies are dwindling and prices have peaked at unprecedented levels.

Lynn Sheets, Key Cooperative’s petroleum department manager, said the price of propane this season is something he has never seen in his 40 years in the industry. Propane prices skyrocketed in the last week of January, when the national average topped $4 per gallon.

Propane has become a hot commodity due to several reasons, dating back to last fall’s harvest. The late, wet harvest fueled the need for more propane to dry crops. Transportation issues are also a contributing factor due to railcar and pipeline issues and not enough trucks or drivers to transport the supplies from Texas, which houses the country’s largest propane storage hub. Combined with this winter’s bitter cold temperatures and historic high exports, a perfect storm has erupted for an unprecedented propane shortage that has pushed prices to record levels.

Sully Transport, Inc., a business based in Sully that specializes in the transportation of liquids, gases, and chemicals nationwide, has felt the sting of the logistical problems surrounding the propane dilemma. “Our whole company has worked extremely hard trying to take care of our propane customers. In normal conditions, we travel 60 to 80 miles to pick up propane for our local customers, and we can usually load in about one hour. This year, we have gone as far 1,200 miles and waited as long as 50 hours to get propane,” said Troy Vander Leest, director of operations at Sully Transport.

The Department of Transportation has issued emergency declarations for 35 states and Washington, D.C., to temporarily loosen trucking rules to allow drivers to spend more time on the road. Employees of Sully Transport have been doing just that to satisfy the demand.

“Our owner operators and company drivers have really stepped up to work the long hours and weekends away from home. Our shop department has done everything asked of them to get and keep all of our trailers running, and our dispatchers have been working seven days a week trying to coordinate the whole thing,” said Vander Leest.

According to Sheets, Key Cooperative is also doing what they can to keep customers warm and heating costs manageable during this time. In a letter sent to customers, Sheets emphasized that Key Cooperative will continue to honor all pricing contracts. Due to limited propane supply in the region, the company is implementing short fills – automatic delivery will receive fills at 60 percent capacity – to ensure uninterrupted warmth. The limited supply requires Key to charge a nominal freight surcharge to future deliveries, including customers with contract pricing. “Please know that we would not take these measures unless it was absolutely necessary,” said Sheets. This freight surcharge is due to Key Cooperative having to go to terminals out of the service area and the line time waiting to load trucks.

Both Key Cooperative and Sully Transport, Inc. were highlighted on the national news scene the first week of February. National news giant CNBC contacted Mike Gerst, president of the Iowa Propane Gas Association, in regards to working on a story about the propane crisis. Gerst recommended the consumer news and business channel travel to Sully, given that the small town has two businesses – Key Cooperative on the retail side and Sully Transport on the transportation side – located in close proximity. The CNBC crew reported Feb. 4-5 and did live reports every couple of hours, according to Vander Leest. The crew also followed Key Cooperative employee Jim Vander Weerdt as he made propane deliveries around the community.


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