Every day the sun comes out and temperatures stay above freezing bodes well for a local propane supply that had been hitting dangerously low levels in recent weeks, with demand increasing amid consistent cold and snowy conditions.
That demand has leveled off, meaning supplies have improved.
“There was a (shortage). The product is freed up a whole lot more now,” said Greg Owen, president of Wellman Oil & Propane Company in Clinton, one of the several local companies dealing with a nationwide shortage that trickled to North Carolina and threatened possible rationing. “We were in a touch and go situation several weeks ago, but things have eased up a lot now. Supply has gotten better. It is not back to normal by any means, but has gotten better.”
According to the North Carolina Propane Gas Association, nearly 5 million U.S. households already rely on propane for home heating and 3 million use propane for residential water heating. Propane is used on more than 865,000 farms to power irrigation pumps, grain dryers, standby generators and other equipment.
The average North Carolina residential price for a gallon of propane was right at $4 last week, down from $4.15 the week before, the U.S. Energy Information Administration cited in weekly updated figures. That price was nearly a dollar less, at an average of $3.15 per gallon, at the beginning of the year, and stood at $2.70 at the beginning of 2013.
Owen said those numbers were consistent with what was being seen in Sampson.
“(The average) almost hit the $4 mark — but we had several increments of spikes that were just unreal,” Owen noted. “It was basically outside of everyone’s control when it happens like that.”
For small businesses, such as Wellman, the company could not just absorb those spikes without raising its own prices. “We have to pass it on,” he said, “or we’re not going to be here, period. You can buy it one day for $2 and then, the next day it would be $2.50.”
Owen estimated that the average in Clinton, Sampson and the surrounding area was between $3.75-$3.95 during those peak times in recent weeks. Now, those numbers are coming back to Earth.
“The prices have pulled back and we’re still seeing some pull-back in the market,” Owen said. “Each day, as warm as we’ve seen in the last few days and weekends, it’s making supply better because usage is not there and demand is not there.”
Now, those average per gallon prices are hovering a full dollar lower, around the $2.80-$2.95 mark.
While the majority of people in Clinton and the surrounding area use heat pumps, propane is an ideal energy source for many in more rural areas who have limited access to electricity grids and natural gas. Even those with heat pumps found that those pumps did not perform as well in the cold weather, and in case of power outages — which did rear their ugly head — customers sought out supplemental heat, such as propane for gas logs.
That back-up plan was a primary reason Wellman Oil Company and others were on the road through the ice, snow and frigid temperatures.
“You can’t wait until the last (minute) to prepare for something like this,” said Owen, “but we’re in that little geographical area where we don’t have cold, cold temperatures, but when it does hit, some people are prepared and some are not.”
While it was not as chaotic as it has been in the past in terms of calls for service, there were still some who were in “panic mode,” left to scramble for some form of heat, Owen attested.
The situation in Sampson and across much of North Carolina was compounded by a late and wet harvest that increased demand for the fuel from farmers, who needed to dry an uncommon amount of grain before storage. Farms require energy in barns and other outbuildings, in the farmhouse and out in the field.
That depleted national propane supplies. Reserves dropped to their lowest levels ever during the second week of January after frigid temperatures blasted much of the nation. Demand and prices then skyrocketed.
“The Midwest and North were really hammered by it,” said Owen. “Their supply issue was a little more critical than here … so the people north began coming south to get our product to carry back north. That automatically makes us a little more short on our product.”
The fact that southern states not as prone to cold weather then experienced sub-zero temperatures and freezing precipitation — and needed a good amount of product — left the supply much lower than usual. Owen pointed to price corrections in the south that put North Carolina and others on the same level as northern states to “put the brakes on” southern supplies being transported away.
“A lot of people didn’t like (that), but it was the only way to stop it,” Owen said.
Just as North Carolina’s propane supply is improving and prices are coming down, northern states still struggling with a propane shortage. A bill was introduced this week in the State of Minnesota’s House of Representatives to put $20 million into a heating-assistance program for low-income residents.
Owen said while the forecast looks good for the near future, that can change at a moment’s notice, as many who experienced the heavy snows in Sampson can attest. It is about being prepared, Owen said.
“They throw out forecasts about a week in advance and last week they were saying it was supposed to be cold this week,” Owen remarked. “The last two days has not been cold to us — nothing like we’re used to. But it can be like this one day then in two days, or even that afternoon, you can see it just turn off. It just depends on the jetstream, and that’s what you have to watch.”
Chris Berendt can be reached at 910-592-8137 ext. 121 or via email at email@example.com.