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Propane emergency declared

Monday, Jan 27, 2014

* Rob, my farmer friend I’ve told you about before, said over the weekend that the propane price situation is getting pretty darned scary. Let’s hope this move by Gov. Pat Quinn to declare an energy emergency helps

As the latest blast of frigid air hung over much of Illinois, the governor’s declaration is designed to ease weather-induced distribution problems that have left some industry observers worried that homeowners could run out of the fuel during an upcoming cold snap.

The declaration eases regulations on propane truck drivers in order to allow them to drive into other states to fill their tanks.

For example, an Illinois driver heading to Texas would be able to cross into the state for propane even if they didn’t have proper licenses, said Quinn spokesman Dave Blanchette.

(T)his was done because, due to the current propane shortage, additional drivers are needed to travel to Texas to haul propane back to Illinois,” Blanchette said.

In addition, state officials also have lifted limits on how long truckers can operate within a 24 period, in order to allow them to travel further distances to pick up loads.

* Background

The shortage, industry officials say, is due to a confluence of events: a Midwest pipeline being shut down for maintenance, a high demand for propane last fall to dry a rain-soaked harvest of corn, competition for pipelines and rail cars caused by increased oil and natural gas production — and the extreme cold.

“I prefer not to call it a shortage,” said Simon Bowman, a spokesman for Pennsylvania-based AmeriGas, the nation’s largest propane retailer. “I prefer to call it tight supply.

“There is propane to be had, but it’s just having problems getting to some of the areas of the Midwest and Northeast,” he added.

* Sen. McCann called for an energy emergency declaration late Friday afternoon…

State Senator Sam McCann (R-Carlinville) hand delivered a letter to Governor Pat Quinn Friday calling on the Governor to declare a State of Energy Emergency in Illinois.

Sixteen states have made similar declarations in recent weeks as prices for LP gas, like propane, have skyrocketed and supplies have dwindled to dangerous levels.

According to the Illinois Petroleum Gas Association, 35-40% of homes in Illinois are heated by propane gas. High demand during harvest and frigid winter temperatures have depleted supplies of gas throughout the Midwest. Prices have also skyrocketed from around $1.50 per gallon in the summer to over $5.50 per gallon in some places currently.

“Thousands of Illinoisans are struggling to heat their homes, and many business owners and livestock producers don’t know whether they will be able to access or afford necessary supplies of propane,” said Senator McCann. “It is my hope the Governor will join numerous other states from across the country in helping ease the burden and cost on many families and businesses in our state.”

If Governor Quinn declares an emergency, he may temporarily lift the 80,000-pound weight limit on Illinois interstate highways, to allow more gas to be shipped in. He could also provide increased assistance to low and moderate income persons through the Low Income Home Energy Assistance Program (LIHEAP) and would allow suppliers to qualify for low-interest loans to reduce the carrying costs of purchases.

The Illinois Petroleum Gas Association says no such declaration has ever been made in Illinois, but that the state is experiencing historical cold and demand for the product.

- Posted by Rich Miller        


26 Comments
  1. - fed up - Monday, Jan 27, 14 @ 1:38 pm:

    Hmm. So one way to rectify the problem is to eliminate some regulations. Makes you wonder what else could be improved by getting rid of burdesome regulations. Some are neccasary for safety but we as a state have gone far beyond that.


  2. - Anonymous - Monday, Jan 27, 14 @ 1:42 pm:

    Care to name any particular “burdensome regulations” Fed Up?


  3. - PublicServant - Monday, Jan 27, 14 @ 1:43 pm:

    Sorry. That was me at 1:42.


  4. - logchain - Monday, Jan 27, 14 @ 1:52 pm:

    “The shortage, industry officials say, is due to a confluence of events: a Midwest pipeline being shut down for maintenance, a high demand for propane last fall to dry a rain-soaked harvest of corn, competition for pipelines and rail cars caused by increased oil and natural gas production — and the extreme cold.”

    Seems to me we need some new “industry officials” that are capable of coming up with contingency plans for emergency situations. Maybe they will use their windfall profits to help alleviate this situation in the future.


  5. - OneMan - Monday, Jan 27, 14 @ 1:52 pm:

    The funny thing is the states around us had done this over a week ago, was kind of surprised we were the only state in the midwest who had not acted.

    Walker 2 days ago..
    http://fox11online.com/2014/01/25/propane-shortage-prompts-governor-walker-to-declare-state-of-emergency/

    Iowa Dec 18th
    https://governor.iowa.gov/2013/12/gov-branstad-signs-disaster-declaration-allowing-for-more-propane-transport/

    Indiana almost 2 weeks ago
    http://fox59.com/2014/01/21/propane-shortage-impacting-hoosiers/

    MO — At least Jan 13th (might have been earlier)
    http://www.fmcsa.dot.gov/documents/alerts/MO-Emergency-Declaration-14-1-Extended.pdf

    Kentucky
    http://www.fmcsa.dot.gov/about/alerts/emergency-declarations_2013.aspx

    The full list is here

    http://www.fmcsa.dot.gov/about/alerts/emergency-declarations_2013.aspx

    This is the sort of thing Quinn lives for… The people of Illinois good and true.


  6. - BIG R. Ph. - Monday, Jan 27, 14 @ 2:01 pm:

    –a Midwest pipeline being shut down for maintenance–
    What company does this kind of work in November-December right before the busy season? Shouldn’t this work be done in June or July?
    Hints of an “effort” to raise prices to me.

    I echo the sentiments of others that these new limited hours trucking regulations need to be rescinded. Quit interfering with commerce!!


  7. - Pot calling kettle - Monday, Jan 27, 14 @ 2:11 pm:

    The limited hours behind the wheel are for safety. I believe such rules were put in place because it is not safe to drive on limited sleep. Add to that a truck full of propane and icy roads and you have a nasty accident waiting to happen. Perhaps they need to hire more drivers.

    I became concerned when the other states began to do this. I am hoping there are no accidents.


  8. - Pot calling kettle - Monday, Jan 27, 14 @ 2:14 pm:

    With respect to the price, I signed a winter contract last May and locked in $1.39/gallon. My tank was filled on Sunday, but I do wonder where they are keeping my remaining 600 gallons.


  9. - Pot calling kettle - Monday, Jan 27, 14 @ 2:15 pm:

    ==–a Midwest pipeline being shut down for maintenance–
    What company does this kind of work in November-December right before the busy season?==

    I seem to remember stories of Enron doing this kind of thing.


  10. - Cook County Commoner - Monday, Jan 27, 14 @ 2:27 pm:

    “Prices have also skyrocketed from around $1.50 per gallon in the summer to over $5.50 per gallon in some places currently.”
    I understand the need to increase sales costs of commodities in short supply to cover fixed business costs. I also understand how the greed factor comes into play in these situations. But a 300% increase in some areas for propane begs for an investigation. I think there still are profiteering laws in place for essential commodities.


  11. - Judgment Day - Monday, Jan 27, 14 @ 2:31 pm:

    Re: Pipeline Maintenance.

    Ok, first off, the companies running pipelines are dealing with the following:

    “On January 3, 2012, President Obama signed the Pipeline Safety, Regulatory Certainty, and Job Creation Act of 2011 (the “Act”) into law. The Act, which reauthorizes federal pipeline safety programs through fiscal year 2015, provides for enhanced safety, reliability and environmental protection in the transportation of energy products by pipeline. The Act increases federal enforcement authority, grants the federal government expanded authority over pipeline safety, provides for new safety regulations and standards, and authorizes or requires the completion of several pipeline safety-related studies.”

    Here’s the link:
    http://www.wilmerhale.com/pages/publicationsandNewsDetail.aspx?NewsPubId=94953

    Yeah, it’s from a law firm, but in sum total, it’s a lot more federal regulations.

    One practical effect has been that IF any mechanical problem is noted, the pipeline companies are on it.

    Right.Now.Immediately.If.Not.Sooner.

    It’s got nothing to do with Enron. It’s to avoid catching a plague of dealing (even more then they already are) with the federal government.

    Sometimes it works for you, sometimes it works against you. In this case, there was pipeline maintenance that was going to have to be done, and it was decided to apparently avoid a blizzard of federal paperwork (to obtain delays), and instead just get the maintenance work done.

    The downside is doing the maintenance work immediately shut down the pipeline and reduced supply. Oh, well.


  12. - thechampaignlife - Monday, Jan 27, 14 @ 3:06 pm:

    ===Add to that a truck full of propane and icy roads and you have a nasty accident waiting to happen.===

    That was the first thing I thought of - less regulated, sleep deprived truckers without the proper licenses (and training?) north bound and down.


  13. - OneMan - Monday, Jan 27, 14 @ 3:13 pm:

    This may be the pipeline maintenance that is being referred to

    http://www.lpgasmagazine.com/cochin-reversal-project-creates-pipeline-pressures/

    If this is it, keep in mind the reversal was announced 18 months ago. If those guys could foresee a huge jump in fall usage to dry silo corn as well as the record cold we are seeing 18 months ago they are in the wrong line of work.

    Sorry, sometimes it isn’t evil big companies nor evil big government, sometimes it is just bad luck.


  14. - OneMan - Monday, Jan 27, 14 @ 3:18 pm:

    Some more about the impacts and why the increased driver hours should not scare you as much (the drivers are spending a lot of time at terminals waiting for the gas)

    http://www.lpgasmagazine.com/marketers-state-execs-mull-effects-of-propane-supply-issues/


  15. - Dan Johnson - Monday, Jan 27, 14 @ 3:25 pm:

    Shouldn’t we be figuring out how to wean ourselves off propane as much as possible? That’s an import to our rural economies, which means we’re exporting out money. More solar and geothermal looks like a smart move.


  16. - Ghost - Monday, Jan 27, 14 @ 3:29 pm:

    I’m pretty sure this is a king of the hill advert from hank…..


  17. - So... - Monday, Jan 27, 14 @ 3:39 pm:

    What other state laws and regulations is the Governor allowed to unilaterally suspend by unilateral declaration?


  18. - OneMan - Monday, Jan 27, 14 @ 3:42 pm:

    So…

    It isn’t state laws, it’s federal rules and there are some guidelines and limits

    To provide vital supplies and transportation services to a disaster area in the United States, emergency declarations may be issued by the President, Governors of States, or FMCSA. These declarations trigger the temporary suspension of certain Federal safety regulations, including Hours of Service, for motor carriers and drivers engaged in specific aspects of the emergency relief effort. See 49 CFR 390.23 for the actual emergency regulation.

    Relief from Federal Motor Carrier Safety Regulations is limited to a maximum of 30 days, unless extended by FMCSA itself.

    The information below reflects currently available relief:

    These Federal exemptions, when in effect, only apply to 49 CFR Parts 390-399. They do NOT apply to CDL, drug/alcohol, hazardous materials, size & weight, or State/Federal registration and tax requirements. (However, a Governor’s Declaration may add some of those exemptions—read the declaration for details.)
    Even if an Emergency Declaration is still in effect, the emergency must be on-going and you must be providing direct emergency relief in order to be exempt from safety regulations.
    The list of Emergency Declarations below may not be complete. Declarations may be in effect even if not listed here.
    Drivers and carriers should coordinate with State and Federal emergency officials before providing assistance.
    Even though safety regulations may be suspended, drivers and carriers are expected to use good judgment and not operate vehicles with fatigued or ill drivers, or under any conditions presenting a clear hazard to other motorists using the highways.


  19. - Doug - Monday, Jan 27, 14 @ 4:42 pm:

    –For example, an Illinois driver heading to Texas would be able to cross into the state for propane even if they didn’t have proper licenses, said Quinn spokesman Dave Blanchette.

    (T)his was done because, due to the current propane shortage, additional drivers are needed to travel to Texas to haul propane back to Illinois,” Blanchette said.–

    Last time I looked, Tejas didn’t border Illinois. If they don’t have a interstate license, how are they going to be legal in the multitude of states they have to travel through?

    And limiting the hours is just fine and dandy as well for Illinois, but if a Oklahoma trooper pulls over an Illinois driver and checks his log book, he isn’t going to give a rats arse what the Governor of Illinois has said.

    Plus, for those complaining about the spot price, do you know how much it costs to pay a driver to go to Texas empty, then wait in line and drive all the way back to Illinois? A whole lot more expensive than running it through a pipeline. It is 847 miles from Springfield to the main terminal near Houston….one way.

    And for all the Texas bashing that goes on in Illinois, just remember who is bailing you out when your heater turns on.


  20. - Rich Miller - Monday, Jan 27, 14 @ 4:47 pm:

    ===bailing you out ===

    You seem to have confused “Making a bunch of money” with “bailing” someone else out. Ain’t nobody doing charity work on this, dude.


  21. - wordslinger - Monday, Jan 27, 14 @ 6:31 pm:

    Is Texas giving away the propane, Doug? Nice of them.

    In the long-term, is there any way to make the utilities run gas lines out of rural Illinois. There’s a natural gus glut for the foreseeable future.

    The utilities will howl, but then again, they didn’t want to hook up the farms with electricity or telephone lines until them bad ol’ gubmint regulators made them do it.

    If you think trucking is held back by over-regulation, you’re awfully young.

    Back in the day, the federales set the routes and rates for every truck in the country. Same with all freight cars, airlines, shipping, etc.

    Read down to the middle for more examples of the massive deregulation that’s occurred in recent decades.


  22. - wordslinger - Monday, Jan 27, 14 @ 7:22 pm:

    Oops, here’s the link.

    http://www.cnn.com/2012/11/12/opinion/frum-conservatives-despair/index.html?fb_action_ids=10151162350446172&fb_action_types=og.recommends&fb_source=aggregation&fb_aggregation_id=288381481237582


  23. - South of 64 - Monday, Jan 27, 14 @ 7:58 pm:

    - Pot calling kettle - Monday, Jan 27, 14 @ 2:14 pm:

    With respect to the price, I signed a winter contract last May and locked in $1.39/gallon. My tank was filled on Sunday, but I do wonder where they are keeping my remaining 600 gallons.

    We called today to have our tanks filled under our contract. (Similar rates to yours) We were told due to the shortage the company would not be honoring the contract!! They want us to pay closer to $5 to fill our tank. I hope you can get yours.


  24. - What is to be done? - Monday, Jan 27, 14 @ 8:00 pm:

    Natural Gas futures surging. Dec’13 gas closed at $3.81/Dth; Feb’14 trading over $5/Dth on CME, and spot prices in northeast surging over $150. The spot market will calm down, but the underlying commodity is up 30% in two months. This is now the primary fuel for electricity generation, thanks to Obama’s war on coal. At the least the Fed will cheer - inflation!


  25. - Pot calling kettle - Monday, Jan 27, 14 @ 10:57 pm:

    ==We were told due to the shortage the company would not be honoring the contract!!==

    There is a “Force Majeure” clause on the contract. I did get a fill at the contract price on Sunday. Only time will tell if I get the rest.


  26. - Pot calling kettle - Monday, Jan 27, 14 @ 11:03 pm:

    ==Obama’s war on coal==

    Seriously? There is no “war on coal.” There is however, an environmental cost to burning coal. Check out the recent reports of smog from China. In the U.S., we decided to take what was an externality to the coal mining and burning industries and internalize that cost by requiring them to clean up their act. (The price of not doing so was recently seen in West Virginia, and those folks will not be reimbursed by a now bankrupt company.)

    There is no war on coal. When the users of coal must pay something closer to the true price (including the cost of not degrading air and water quality), coal becomes a less attractive option.


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