Propane dealers said Monday they hope to head off a repeat of last winter's supply crisis in Wisconsin by adding more storage tanks, keeping homeowners' tanks full and urging more customers to lock into delivery contracts.
Wisconsin and other upper Midwestern states grappled with a pronounced propane shortage during the second half of the 2013-14 winter due largely to prolonged frigid weather, a pipeline closure and heavy demand for propane to dry crops during an unusually late harvest. Prices jumped to as much as $7 per gallon in some places.
Propane and agriculture industry leaders told reporters during a conference call Monday that they expect another cold winter similar to last year. Further, the pipeline that shut down last year is now being used to transport oil solvents to Canada rather than move propane. That change will translate to 300 million fewer gallons of propane for the Midwest this year, they said.
"There was no playbook last year in terms of how dealers, suppliers and others went through this," said Brandon Scholz, managing director of the Wisconsin Propane Dealers Association. "We experienced things we'd never experienced before. So this year the difference is everybody in the propane industry is acutely aware of what happened last time. We aren't going to be caught unaware if the weather pattern repeats itself."
Bill Oemichen is president of the Cooperative Network, a group of 600 cooperatives serving Wisconsin and Minnesota, including about 90 cooperatives that supply propane to farmers, homeowners and businesses in both states. He said retail dealers have been adding storage tanks so they can accept and hold more gallons. He estimated the network's Wisconsin members have increased their storage capacity by nearly 13 percent over last year.
CHS Cooperative, for example, is rushing to finish a facility at Hixton, between Eau Claire and Black River Falls. Slated for completion in October, the site will be able to accept propane off railroad cars and store up to 360,000 gallons, Oemichen said. By the end of the winter, he said, 15 million gallons will pass through the site, offsetting the loss from the pipeline changeover.
Dealers are making an effort, too, to keep customers' tanks topped off heading into fall, said Dan Pannier, manager of propane operations for GROWMARK, a Bloomington, Illinois-based cooperative that supplies customers in southeastern and central Wisconsin with fuel, equipment and seeds. Last year's harvest came in such a singular rush that many dealers didn't have time to fill tanks that had been drawn down over the summer, he said.
Dealers also are urging more customers to enter into contracts with their suppliers rather than simply calling them up and ordering refills as their tanks empty. Contracts give dealers a better picture of long-term re-supply commitments, Oemichen said, but only 42 percent of the state's 250,000 residential propane customers had contracts last year and about 53 percent have locked in so far this year.
Tom Thieding, a spokesman for the Wisconsin Corn Growers Association, said his group is telling farmers to get their propane contracts set up for drying season. The association also is urging famers get their crops in as soon as they can in hopes of setting a gradual harvest and avoiding another massive run on propane for drying, he said.