Solutions for propane shortage explored at hearing

A propane dealer from northern Wisconsin went to Washington on Thursday to offer recommendations for how the nation should respond to the propane shortages that affected 26 states and drove prices for the fuel to record levels this winter.

"One in four gallons of propane are going overseas, and export facilities are being built as fast as the concrete can be poured," said Gary France of France Propane Service in Schofield.

The U.S. government may need to consider changes to restrain exports, said France, who's the chairman of the National Propane Gas Association.

The dramatic shift in U.S. energy production — including the production of oil, natural gas and propane from shale formations — has created big changes in the flow of oil on pipelines.

As a result, pipelines that used to carry propane toward the Midwest are now carrying it away, to facilitate exports.

Others at the hearing recommended creation of a federal "early warning system" to alert propane dealers and customers when supply shortages may be imminent. The Energy Department is also in need of more detailed data from the propane industry about the status of supplies.

Sen. Tammy Baldwin (D-Wis.) said better planning and enhanced storage are needed to prevent problems.

Melanie Kenderdine of the Department of Energy said she and Energy Secretary Ernest Moniz were involved in the establishment of a heating oil reserve for the northeastern United States during the Clinton administration.

A federal energy infrastructure review will examine whether the Midwest needs a strategic propane reserve, she said.

When supplies ran short, the federal government through the Federal Energy Regulatory Commission invoked powers for the first time to force pipeline operators to prioritize shipments of propane to hard-hit regions including the Upper Midwest.

Andrew Black, president of the Association of Oil Pipe Lines, said a key challenge with propane is the seasonal nature of the business.

Wisconsin relies more on propane for fuel than any state except Michigan. Prices soared as a result of the combination of factors that included an early start to winter, surging exports, and pipeline outages and disruptions, as well as a heavy and moist corn crop that required much more propane for drying.