Franken presses for action on propane prices

WASHINGTON – Sen. Al Franken pressed federal and industry officials Thursday to be smarter and more responsive to potential shortages of propane so the 250,000 Minnesotans who rely on the fuel to heat their homes and warm their livestock don't face skyrocketing prices like this year.

At a hearing on Capitol Hill, Franken called the dwindling propane supply throughout the Upper Midwest this winter "a crisis" and said the federal government should consider stockpiling reserves that could be tapped during future shortages.

"I heard from homeowners who couldn't afford to heat their homes," said Franken, a Democrat, who chaired the hearing for the Committee on Energy and Natural Resources. "I heard from turkey growers who couldn't afford to heat their farms."

Industry experts say the combination of events that caused prices to go from $1.67 a gallon to more than $6 a gallon in some parts of the country was not caused by actual shortages of propane in the United States but rather a breakdown in the distribution system.

A pipeline that delivers 40 percent of Minnesota's propane to the state went offline for more than a month in late November, just as demand was starting to increase. Delays with rail transport and a wet harvest meant farmers burned through more propane to dry crops.

In just a matter of weeks, as temperatures hovered at zero for days on end throughout much of the United States, 20 governors declared a state of emergency and state and federal officials scrambled to secure adequate propane supplies for homes and farms in the Midwest and Southeast.

In Minnesota, demand for propane over the winter jumped by more than 100 million gallons from the previous year, from 166 million gallons in 2012-13 to 291 million in 2013-14, according to the Minnesota Propane Association.

If farmers and those commercial businesses that rely on a lot of propane would have stocked up on the fuel in the summer, the problem would not have been so exacerbated, industry said.

"U.S. propane production is at its highest levels in 10 years," said Andrew Black, president of the Association of Oil Pipe Lines. "People need to prepare more."

Franken did not seem satisfied with that answer.

"People don't buy propane during the summer," he retorted. "They just don't. ... I think we have a seasonal thing here."

Minnesota turkey farmer John Zimmerman, who flew to Washington to testify, agreed.

Zimmerman, a past president of the National Turkey Federation, told senators on the panel that he was forced to ration what propane he had to keep his turkeys warm — which made him lose production efficiency and worry about his animals' welfare.

"This has and continues to directly impact the growers' bottom line when the turkeys go to market," he said.

Melanie Kenderdine, director of the office of energy policy at the Department of Energy, said the federal government is limited on how it can respond to propane distribution, which is subject mostly to demand and the private sector. Kenderdine noted that the propane pipeline that was temporarily offline last year has been permanently rerouted and shut down to propane fuel — something everyone should prepare for next winter.

Franken pressed her on creating a "Strategic Propane Reserve" similar to the Strategic Petroleum Reserve — the world's largest supply of emergency crude oil that can be tapped only by the U.S. president. He told federal officials they should have done more to warn Americans of a potential shortage last year

"It seemed late. That's the big takeaway," Franken said, noting he was less worried about the coming winter than in the distant future. "I don't want this to happen again ever."