Potential propane shortage this fall

COVID's grasp on the economy is being felt on propane supplies. And that could affect its availability this fall.

The potential problem with supplies is a result of people traveling less. About 20% to 25% of propane is created from crude oil refining (the remainder of production comes from natural gas wells). So reduced consumer travel this summer means less demand for gas which, in turn, is reducing refining and eventually causing crude oil wells to be shut down.

Last fall's shortfall of propane led to emergency declarations covering nine Midwest states. But the 2019 harvest season dealt with an abundance of overly wet corn in fields, which strained the delivery of propane to the countryside. Otherwise, propane supplies were abundant in the rest of the country.

Mike Newland of the Propane Education & Research Council is strongly advising farmers to estimate their crop drying propane needs now and then contact their supplier to lock in a supply. "More corn and soybeans planted (this spring) means an increase in demand for propane, whether it's used to power irrigation equipment or to help dry grain at harvesttime," he adds. "Last year's energy demand issues that played out at harvesttime across the Midwest are still fresh in everyone's mind, which is why we're reminding farmers of a few steps they can take now to prevent potential issues later."

The Propane Council recently launched a Grain Drying Calculator tool to help producers determine the number of propane gallons needed each season using just three simple data points. The tool allows users to estimate the amount of propane each operation will require, making it easier to fill tanks early and prepare for supply needs prior to an increase in demand.

The silver lining in this potential dark cloud is that the average wholesale price of propane is trending around 40¢ less per gallon than a year ago. This creates the opportunity to lock in lower propane prices now before prices potentially increase this fall.