Report shows significant impact of winter 2013 propane crisis

Report shows significant impact of winter 2013 propane crisis

Report reveals Midwest consumers spent $561 million more than in previous winters.

LAST winter the price of propane doubled to more than $4 per gallon in the Midwest and remained high for an extended period of time, stressing many household budgets. Shedding some light on the issue, a newly released report  by Senator Amy Klobuchar (D, Minn.), vice chair of the U.S. Congress Joint Economic Committee, explored the issue and found that compared with the average amount of money spent on propane during the previous five winters, Midwest families spent $561 million more in the winter of 2013-14. (Figure)

The report found that Minnesotans alone spent $71 million more on propane in the winter of 2013-14 compared to the average of the previous five winters. Only Michigan residents, who spent $72 million, had a bigger increase in the Midwest.

“My report confirms what so many Minnesota families and businesses felt firsthand last winter: the propane shortage had significant financial consequences,” said Klobuchar, adding that Minnesotans rely heavily on propane to keep warm during the brutally cold winter months.

The report also found that 91.7% of houses heated with propane in the Midwest were in rural areas, which were unlikely to have access to natural gas distribution systems. And while only 4.8 % of U.S. households use propane to heat their homes, the report also showed that 10.2% of homes in Minnesota, Iowa, Missouri, Nebraska, North Dakota, South Dakota, and Kansas use it for heating.

The largest share that heat with propane was in South Dakota, where 17.8% of homes use propane for heating. South Dakota, however, spent significantly less—$17 million—on propane compared to Michigan and Minnesota.

Nearly half of the households using propane for heating earn less than $50,000, the report noted, making it more difficult for these households to absorb the impact of a propane price spike.

Because of this, Klobuchar made several recommendations in the report, including improving regional information collection, increasing inventory levels and improving reliable transportation of fuel, spurring energy efficiency, and increasing aid to families when price spikes occur or giving them access to the funds to purchase propane when prices are lower.

In addition to the report, Klobuchar has taken steps to bring relief to Minnesotans and the Midwest. She passed bipartisan legislation with Senator John Thune that was recently signed into law to allow governors greater autonomy in declaring emergencies. Additionally, the bill required the Energy Information Administration (EIA) to provide early warnings to governors if the inventory of residential heating fuel falls below recent averages. She also crafted legislation to make it easier to transport propane to communities impacted by the shortage, which was signed into law earlier this year.

“I will continue to work to make sure this vital energy source is readily available for consumers,” expressed Klobuchar.      

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