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Ag official: Buy propane early, avoid uncertainty

Published: Thursday, July 24, 2014 10:47 a.m. CDT

DUBUQUE (AP) — Farmers and homeowners who use propane should fill their tanks before cold weather arrives or contract supplies at lower prices beforehand in case costs spike this winter as they did last year, Iowa Agriculture Secretary Bill Northey said.

Dwindling Midwest supplies and rising demand pushed propane prices last winter to nearly $5 per gallon, more than three times their normal level. Northey doesn’t expect prices that high, but stresses it’s important to be prepared.

“I would really doubt that a situation like that would hit us again, but there is just no way to know for sure,” he said.

Prices will largely depend on how cold it is this winter and how long the cold lasts, the Dubuque Telegraph Herald reports.

“I think the propane situation really caught people off guard last year,” said Deb Grooms, executive director of Iowa Propane Association. “We had experienced some not-so-cold winters in the previous years, and people had the attitude that they didn’t want to buy propane if they wouldn’t need it.”

Planning ahead is especially important given the growing concerns about supply.

Iowa historically received about 20 percent of its propane from a 1,900-mile pipeline that stretches from Canada across Iowa and into Illinois. The pipeline owners have modified it to carry petroleum products, effectively shutting off that method of propane delivery to Iowa. As a result, state residents are increasingly reliant on propane from Conway, Kansas, which costs more.

“From what I have seen with their storage numbers, they don’t have as large a supply on hand as they normally do,” Northey said.

Inadequate supply could mean a situation like last year when propane prices ballooned from $1.40 to near $5 per gallon.

About 15 percent of Iowa households rely on propane for warmth. Propane also is used to run large grain dryers to remove excess moisture from corn and soybeans at harvest time. A slow-maturing crop, or even a larger-than-average crop, could increase the amount of propane needed for drying and put extra stress on the supply, Northey said.