Mainers seeing weekly propane cost increases as demand surges, deliveries lag

The average cost of propane in Maine has risen another seven cents a gallon and delivery trucks from around the nation are converging on the state to help fill tanks due to a shortage, Maine and New England officials said Monday.
Courtesy of Webber Energy Fuels
The average cost of propane in Maine has risen another seven cents a gallon and delivery trucks from around the nation are converging on the state to help fill tanks due to a shortage, Maine and New England officials said Monday.
Posted Dec. 16, 2013, at 5:31 p.m.

AUGUSTA, Maine — The average cost of propane in Maine has risen another seven cents a gallon and delivery trucks from around the nation are converging on the state to help fill tanks due to a shortage, Maine and New England officials said Monday.

“It’s $2.92 [a gallon]. It’s up seven cents from last week, which was up eight cents from the week prior,” Lisa Smith, of the Governor’s Energy Office, said Monday of propane heating costs.

The average costs of heating oil and kerosene also have risen. Oil is selling for an average $3.66 a gallon, an increase of 2 cents over last week, and kerosene is selling for $4.06, an increase of 3 cents, Smith said.

There are several reasons why there is a shortage of propane and it has to do with international supply and demand, but the weather also is playing a role. Recent snowfalls have delayed incoming shipments by rail and by truck, which spurred a request last week by the Propane Gas Association of New England for Gov. Paul LePage to extend truck driving hours.

The governor issued a limited emergency proclamation Friday that waives U.S. Department of Transportation rules and extends the hours of service for heating fuel transport and deliveries in Maine for two weeks.

“The weather has been cooler than normal for late November and early December so demand is up,” Joe Rose, Propane Gas Association of New England president, said Monday.

“Most small propane commercial dealers don’t have a lot of storage,” he said. “They only have three or four days of storage, so they need a steady supply of propane to refill their tanks and supply their customers. When we have a super demand, the local dealers are having a hard time keeping up.”

Maine has approximately 46,000 households that heat with propane, Rose said.

There is less propane available in the state because the U.S. has the second-lowest propane selling price in the world and foreign markets, along with locations in the western U.S., are gobbling up the available supply, both Rose and Smith said.

That has caused some Maine distributors to “order propane from far away,” Rose said. “We’ve been working with some truckers who are willing and able to provide propane from as far away as Kansas. They’ll help get everybody filled up this week so people can enjoy the holidays.”

Rose added that “there is plenty of propane, but we just can’t get it here.”

LePage noted the availability of propane in Maine decreased with the closure of the Northern Rail Route after July’s deadly rail disaster in Lac-Megantic, Quebec, when making his emergency proclamation.

How the fuel gets to Maine has changed in recent years. Up until a few years ago, most of the propane used in New England typically was shipped to ports in Newington, N.H., near Portsmouth and Providence, R.I., and/or piped to New York and trucked to Maine, which is void of propane pipelines. A small portion arrived by rail.

“The terminals in Newington and Providence are empty and it’s all because of economics,” Rose said.

Suppliers are selling their propane to the highest international bidders and the result is that imports are down dramatically, he said.

“They haven’t brought a ship in for two years,” he said of the New England ports.

With marine shipments heading elsewhere, how propane gets to Maine has had to change.

“The entire picture in Maine now is 95 percent rail dependent and the other 5 percent is trucking,” Rose said.

Another source, a regional gas pipeline, also is no longer supplying the Northeast, Smith said.

“There were two big pipelines that brought propane into New England and with one of those, this year, the flow has been reversed,” Smith said.

Texas Eastern Products Pipeline Co. LLC, which operates a pipeline from Mont Belvieu, Texas, to Todhunter, Ohio, asked for and received permission from the Federal Energy Regulatory Commission last year to reverse the flow of the pipeline, Rose said.

Both Smith and Rose said whenever supplies are short, prices typically rise.

“The price is higher than it had been at any point last year and we’re just getting into the cold weather, but we’re not at a historic high yet,” Smith said.

“Demand drives that price,” Rose said. “The price of propane has historically been very stable and I think it will continue to be stable once we get through this blip in demand.”

He added that demand is so high that at least one maritime shipment is already scheduled to arrive in Newington in January.

BDN writer Christopher Cousins contributed to this report.

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