WPGA Statement on the Crisis in the Propane Industry

The Wisconsin Propane Gas Association and its members are working every day to deal with the crisis facing the propane industry in Wisconsin. This crisis is not limited to our borders as it is affecting the Midwest, the Northeast and virtually all sections of the country.

According to our members and industry reports, there is an extreme shortage of propane and propane dealers simply cannot access enough propane to supply their customers.  Due to insufficient supply and allocations across the board, many propane dealers are only able to receive minimal deliveries.

The WPGA has worked closely with Governor Scott Walker to provide almost 85 continuous days of exemptions from the federally mandated hours of service so that propane could be transported from the terminals in Wisconsin and the Midwest region.  While this relief was critical during the past 8 weeks (as is the current federal exemption), it does not solve the problem of diminished supply.

As the industry has struggled with the highest consumer demand in our recollection; and multiple price increases that have been imposed on retailers during the past few weeks, we are stunned by the massive price increase delivered this week.   Total increase at wholesale within the last 8 days is up $2.05 if not more in other areas.   (Whole sale cost is before transportation, assessments, expenses and other fees.)

Wholesale Propane Pricing Update out of the Superior WI Terminal

Last week 1-13-14 to 1-17-14                This week:

é 5.5¢ Tuesday                                      Monday 1-20-14 é 25¢

é 5¢ Wednesday                                   Tuesday 1-21-14 é 75¢

é 14.5¢ Thursday                                   Wednesday 1-22-14 é 60¢

é 20¢ Friday

As prices continue to increase and high demand continues with no relief from the arctic weather blasts across the region, we expect prices to consumers will increase to $4.00-$5.00/gallon, and could rise above that level.  Propane retailers in the state will lose money this season while being accused by customers of price gouging.  Nothing could be further from the truth.

We are in a crisis and there is no short term solution.  While domestic production of propane is at some of the highest levels ever, over half of our states are affected by this shortage.  Storage supply is significantly down and tankers are accessing propane by loading from the pipeline.   Many point to unlimited export of propane and a railroad system unable to deliver tanker cars when promised as two of the root causes of the problem.

The WPGA will join with other state associations to pursue limiting exports during periods of high demand; investigate reports of price gouging and forcing rail companies to meet their delivery commitments or be penalized.  We will take these actions not only on behalfof our members, but on behalf of their customers whose health and safety are being compromised.

Be warned, the situation in 2013-14 is not the result of a “perfect storm,” but rather due to structural flaws in the industry.  The WPGA and its members are committed to working to find solutions to this crisis.

Please feel free to contact me at any time to discuss this matter at(608) 244-8460 or brandon@capgroupwi.com.

Brandon Scholz, Managing Director – Wisconsin Propane Gas Association