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Agricultural News

Recent Propane Crisis Sparks Interim Study Request

Tue, 24 Jun 2014 08:37:53 CDT

Recent Propane Crisis Sparks Interim Study Request    

An eastern Oklahoma legislator wants the state to be prepared if propane prices spike again this winter.
Rep. James Lockhart, D-Heavener, has requested an interim legislative study of propane infrastructure and supply in Oklahoma. House Speaker Jeff Hickman said he will announce the studies he has approved, and the committees to which they have been assigned, by July 11.
Hodgen propane/butane dealer Curtis Kelly said his domestic customers usually pay $1.85 per gallon for propane, and poultry farmers pay $1.50 per gallon.
Five months ago, though, prices tripled; Kelly said he had to charge in excess of $5 per gallon when propane and butane prices skyrocketed. The three Oklahoma refineries where Kelly procures propane were charging him $4.95 a gallon, he said. Consequently, filling up his 10,000-gallon transport truck cost him $50,000, and he was going through a load “about every day” at that time.
The retail price of propane “has risen from $1.80 to $2.65 … within the past four days,” Lockhart wrote to his colleagues in the Legislature on Jan. 22, and “it is shooting up again today…” That same day, the statewide average price of propane in Iowa climbed to $4.18 per gallon, compared to $2.61 a gallon one day earlier.
State Rep. David Perryman, D-Chickasha, said many of his constituents were experiencing the same dilemma. Although propane retailers in his legislative district were “scrambling to protect their customers,” the costs “would be devastating to consumers even if the retailers sold propane at wholesale cost,” Perryman lamented.
The price spike, which occurred during an unseasonably cold winter, imposed a financial strain on chicken and hog farmers who use propane to heat their animals; on senior citizens and others on fixed incomes, who use propane to cook with and to heat their homes; and on public schools, whose budgets for utility bills were disrupted by the propane crisis, Lockhart noted.
More than 400,000 Oklahomans rely on propane to heat their homes and prepare food, and many Oklahomans depend on propane to “support their livelihoods and for economic security,” Lockhart related in House Resolution 1039.
The Oklahoma Propane Gas Association counts 21 suppliers serving this state, and has 96 retail members, ranging from Boise City to Miami and from Braman to Gainesville, TX.
In his resolution, Lockhart said Oklahoma and at least 21 other states were experiencing critical propane shortages. Several other states, he said, allocated government funds help families cope with the propane shortage. In Oklahoma, though, no financial assistance “has been given directly to Oklahoma families to help them overcome the propane crisis,” Lockhart complained.
Gov. Mary Fallin issued an executive order on Jan. 31 that instructed the state Department of Human Services to expedite applications for the Low Income Home Energy Assistance Program (LIHEAP) and the Energy Crisis Assistance Program (ECAP).
In addition, supplemental funding for low-income households who use propane was made available through ECAP. The public assistance was provided from a $4 million federal grant coupled with $600,000 in donated funds from utility companies, the state Department of Human Services reported.
In HR 1039, Lockhart recommended that some money be allocated from the state “rainy day” fund “to provide assistance to families, children and businesses in need because of the propane shortage.” The resolution died without ever receiving a hearing. The Constitutional Reserve Fund contains approximately $532 million, ledgers reflect.
Lockhart said he asked the state Attorney General’s Office to investigate whether propane producers were price gouging, and he asked the governor to freeze prices under the state’s Emergency Price Stabilization Act of 1999. He appealed to the Oklahoma Bankers Association to approve short-term, low-interest loans to small propane suppliers “so they could extend credit to their customers.” He also wrote a letter to the U.S. Secretary of Agriculture, requesting relief for farmers coping with soaring propane prices.
Apparently it was all for naught, though, as none of his requests was approved.
Lockhart said he proposed an interim legislative study of the subject because, “If it happens again this winter, I want us to be prepared.”


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