Vermont’s Congressional delegation is asking federal authorities to temporarily halt exports of propane. But fuel association officials say there are other factors shortening supplies and raising the fuel’s prices.
Vermont Senators Bernie Sanders and Patrick Leahy and Congressman-at-large Peter Welch have asked U.S. Commerce Secretary Penny Pritzker to use emergency powers to temporarily restrict exports of propane. The trio is concerned that prices for the fuel have risen over 30 percent in just three months — $4.13 a gallon in the second week of February in Vermont. In its letter, the delegation notes that 15 percent of homes in Vermont heat with propane, the highest rate in New England and the second highest in the country. The lawmakers are displeased that while propane is at an all-time high production rate, it is in short supply in the U.S. because nearly all new propane produced in the past three years has been exported to overseas markets.
Propane Gas Association of New England President and CEO Joe Rose notes that propane prices have been coming down for the past three weeks and anticipates prices will return to normal by mid-March.. “We never saw the spike in propane prices in New England that they saw in the rest of the country. There were consumers in the Midwest whose retail price doubled. They were in a real shortage situation.”
Rose explains that fuel dealers must order their stock a year in advance. But in New England they recognized early an increased demand were able to order higher-cost propane from Europe and North Africa. “Unfortunately the Jones Act from 1920 doesn’t allow propane to move from one U.S. port to another unless the ship is American made. And unfortunately there are no American made ships that can move propane. So the reason the price went up in New England is in December we were going down to North Carolina, western New York, Pennsylvania and Ohio to get propane. In January and February we’ve been bringing propane in from Europe and North Africa to supplement our supply.”
Vermont Fuel Dealers Association Executive Director Matt Cota notes that propane is a byproduct of natural gas production, and the U.S. is producing more than ever before. As a result, there are neither enough rail transport nor storage facilities available, so halting exports would not help, since there would be no place to put the product. Cota adds New York State could help solve some of those propane problems. “We need more storage and there’s a proposal to build 88 million gallons worth of storage in Watkins Glen, New York, in the salt caverns. That proposal, if it was allowed, would do tremendous things to alleviate the storage issue that we currently have today and would have the effect of lowering prices.”
Cota says rather than focusing on exports, what’s needed is an assessment of the infrastructure. “As we reach the tail end of this winter, I think what we’re see is an opportunity to address all these infrastructure and transportation challenges this summer so we can ensure that next winter this doesn’t repeat itself .”
Vermont’s Congressional delegation says the Commerce Department can curtail exports under the International Economic Emergency Powers Act, which protects the domestic economy from a drain of materials and the inflationary impact of foreign demand.