Feeling the heat: Record-high propane prices have people sweating the bill
With propane shortages around the Upper Midwest and prices at a record high, families in and around Perham are feeling the pinch.
Propane prices in Minnesota are reportedly up to triple what they were a year ago. Commerce Commissioner Mike Rothman told Forum News Service earlier this week that prices that were about $1.50 a gallon before the recent crisis have in some places gone above $6.
In some areas, including nearby Park Rapids, price is only part of the problem, as serious shortages have kept people up at night in fear there might not be enough of a supply to heat their homes.
That hasn’t been quite as much of a concern in Perham. Jason Aho, Lakes Area Cooperative’s Energy Division Manager, said their customers haven’t had to worry about running out of propane, but to keep it that way, the company is not currently taking on any new customers.
“Right now, we have propane,” he said. “We have supply... from Iowa, from Kansas, some from Superior Wisconsin, and southern Minnesota. But it’s not cheap. We’ve got to work hard to get it...and it’s expensive, with shipping costs. Not only that but volatility in the propane markets right now is crazy. But we’re taking care of our customers at this point. We’ve been very fortunate.”
Lakes Area Cooperative supplies propane to 6,600 customers in Perham and nearby areas in northwestern Minnesota. The company primarily serves residential and agricultural customers, as well as some commercial.
Aho said he’s been hearing a lot about the high prices from people.
“Customers are frustrated, and we understand that,” he said. “Most of us (at the co-op) use propane ourselves. We’re humans here, too, and we feel the pinch just like anybody else. We’re doing what we can, and we hope they understand that.”
There’s not much local suppliers can do about the high prices. Aho said suppliers are playing as much of a guessing game as anybody else; they know inventories are low in the U.S. and Canada, but they don’t know when to expect a change.
“Right now, it’s all over the boards,” he said. “From one day to the next, we’ve seen $1.60 swings and seen pipelines move .90 cents either way within a few days.”
Warmer weather would help, he said, but as of press time he didn’t know when people could expect to see a light at the end of the tunnel.
“Every time we’re below zero, it puts a draw on it,” he said of the supply. “Even getting into the teens or 20s would help.”
In light of the situation, which directly affects about 250,000 propane-using homeowners in Minnesota, Gov. Mark Dayton declared a state of emergency last Monday. On Friday, the state’s Executive Council extended that emergency declaration for 30 days.
The declaration gives Dayton the ability to take actions, such as utilizing National Guard troops or opening armories as shelters for people without heat.
The governor is also holding daily telephone conference calls with propane industry leaders and people in his administration, and a propane hotline has opened to take calls seven days a week. The hotline is intended to answer propane-related questions or concerns from Minnesota residents.
On the national level, the Obama administration announced it would release more heating assistance money for people who can’t afford propane and other fuels. The Propane and Education and Research Council said it was investigating why the shortage occurred and what can be done to prevent it from happening again.
In the meantime, propane users are taking some actions of their own to stay warm and save money, including using alternative heating sources (such as portable electric heaters) where safe and feasible, and applying for financial assistance through programs like Minnesota’s Low Income Heating Energy Assistance. People who live in the Perham area can apply for this program through the Mahube-Otwa Community Action Partnership, by calling 218-739-3011.
Also, United Community Bank in Perham is offering low interest loans to the community to help those affected keep current on their utility bills. Call the bank at 346-5700 for details.
For a longer-term solution, some propane users are considering a switch to other energy sources.
Perham City Manager Kelcey Klemm said the city has had more calls than usual this winter from people interested in hooking up to Perham Natural Gas. He said the city is interested in expanding its services to more areas outside of town, but there needs to be enough interest to make it worth the city’s cost.
If the residents of a well-populated rural neighborhood got together and requested a natural gas extension, for example, the city would be likely to agree to it. Or, if there were high volume and consistent gas users, such as turkey barns or grain dryers, within a particular area, that area would also be a good candidate for an extension.
“Every year, we add extensions to areas and subdivisions where it’s financially feasible,” said Klemm. “It’s a never-ending process; we’re always evaluating different areas. That’s sometimes spurred by the city, sometimes by homeowners who get together and approach the city.”
Larger extensions made in the past include projects around Little Pine and Big Pine Lakes and parts of Ottertail.
Due to the higher prices of propane and fuel oil this year, Klemm said, “there’s definitely more interest” from people than usual.
According to information shared by Perham’s Finance Officer, Patti Stokke, the average annual heating cost for a home that uses natural gas is $627. By comparison, homes that use electric heat cost $2,041 per year to keep warm; electricity/duel fuel costs $1,169; propane, $3,728; and fuel oil, $2,099. These figures are based on prices compiled from local suppliers on Tuesday.
To reach the state’s propane hotline, call 800-657-3504 between the hours of 9:30 a.m. and 4:30 p.m.