Propane shortage continues, causing residents worry

ALPENA – Although propane costs could be edging down slightly, some area residents have been frustrated by prices of over $4 a gallon in recent weeks.

Michigan Gov. Rick Snyder repeatedly has issued a statewide propane emergency, because of shortages, which some blamed on a broken pipeline from Edmonton, Canada, to the Rapid River terminal in Michigan’s Upper Peninsula.

However, some of the fuel is being shipped overseas, according to reports. In November, the U.S. Energy Information Administration reported 410,000 barrels of propane were being shipped daily. A barrel contains approximately 42 gallons.

Adding insult to injury, Michigan is one of the largest producers of natural gas. Propane is created as a byproduct of natural gas and petroleum refining.

“We’re getting a lot of complaints, because people cannot afford it,” Scott Gabriel, one of the owners of Fick & Sons in Grayling, said. “People are telling me they can’t buy food or medicine. I’ve been in this business 25 years and it’s horrible.”

Most of the region’s propane is refined in Mont Belvieu, Texas, and is piped to the St. Clair Underground Storage terminal in Marysville, a town located at the base of Michigan’s Thumb, he said.

Fick & Sons has a fleet of trucks capable of hauling12,000 and 16,000 gallons at a time and those vehicles have been making the 400-mile round trip from Marysville to Grayling to keep their depot supplied.

The market controls the price of propane, he said.

“The big companies like Inergy LP set the prices of the propane they buy and store,” he said. “And when the supply gets really low they raise the prices to make people conserve, because they don’t want to run out.”

Gabriel said there are signs more product is becoming available, but prices haven’t come down yet.

“We’re not even certain why the supply has been so low, other than it’s being shipped overseas,” he said. “We would like to know what’s going on. This is affecting our livelihood.”

The shortages also are forcing people to select heating alternatives, such as pellet stoves, which could reduce future propane sales and consumption, he said.

Meanwhile, to help customers out, local drivers are on the road more often, delivering smaller quantities of propane so it is affordable.

Like many companies, Fick & Sons also offers a variety of ways customers can lock in propane prices in the summer, when demand is lower.

Crystal Flash, a Grand Rapids propane company, provides the fuel to residents in Hillman. However, Marc Foerster, vice president of business development, said the company was able to avoid the huge price hikes, because of its storage capabilities.

“Our story is a little bit different,” he said. ” We own a lot of propane.”

The company locked in contracts for 100 percent of the propane it would need ahead of time and then stores it underground in Marysville or in tanks at its depots, he said.

“Another piece of the puzzle is that some retailers didn’t protect their customers by buying enough gallons in advance – like buying insurance,” he said.

So with plenty of propane on hand, he said he’s been able to add customers.

About half of the customers in the company’s service areas are paying $2.49 through April a gallon through April. For customers buying without a contract, the propane was $2.799 a gallon for a 500 gallon tank, he said.

“We’ve been doing this for 80 years and we hate to see the industry get a black eye,” he said.

Betsy Lehndorff can be reached via email at blehndorff@thealpenanews.com or by phone at 358-5693. Follow Betsy on Twitter @bl_alpenanews.