2017-2018 Propane Supply

Propane Supply

 

As a salesman for the energy team at CHS Larsen Cooperative, I have always worked under the concept that our customers should contract or lock in their fuel to secure a price for the season…whether that season be corn drying or winter heating; price was always the driving factor behind contracting propane.

What Has Happen

Over the past two decades I have seen my share of volatility and I had never witnessed any other reason to secure your propane aside from price….until  a few years ago.  Please, think back to the winter of 2016/2017 and remember one of the coldest winters on record in Northeast Wisconsin. Below zero for days, then weeks, the cold weather would just not let up- at this point, folks are becoming concerned about the cost of heating their homes; not realizing that our main source of heating homes in rural areas was quickly becoming nonexistent.  By the end of January 2014, Northeast Wisconsin residents were quickly becoming more concerned with how they would heat their home, not so much on what the cost would be to heat.  You might ask yourself, how could this happen?  We have winter every year in Wisconsin, we have always had enough LP to heat our homes in the past…how and why does this happen?

The winter of 2014 did not create this problem, it was just a contributing factor!  This disaster started in the Spring of 2013; where we saw a cold, wet planting season.  A cool growing season did not help either. Then we get to fall harvest and we have corn coming off the fields as high as 32% moisture.  This brought one of the biggest drying seasons the Midwest has ever seen.  During this entire time, China started putting obscene values on propane; which led to the US exporting record amounts of propane.  Going into winter, we saw some of the lowest inventories ever recorded.  Then the cold started….and wouldn’t let up.  We ran out of our winter supply real quick.

Were we not prepared for a super cold winter?  Maybe not, but that was just one factor that contributed to this disaster.  After all of the media coverage related to this shortage, Governor Walker declared a state of emergency and horrific stories of the elderly looking at the possibility of freezing to death because they would not leave their homes; we learned our lesson and have taken extra measures to assure that this will never happen again, right?

Sorry folks, nothing has changed, no adjustments have been made to assure us that we will not encounter another shortage.

Now, This Year

This brings me to the Spring, Summer and Fall of 2017.  Cold wet late spring, right?  Cooler summer, not the greatest growing season, right?  Fall will bring a heavy drying season.  The US is currently exporting more propane than ever.  National propane inventories are currently lower than they usually are in the dead of winter…this is summer, we should have an overabundance…but we don’t.  The question I have to ask; what kind of winter are we going to have?  This scenario scares the daylights out of me.  All I can think is that we need to protect ourselves from the possibility of a re-occurrence of 2014.

Now, ask yourself, how can you protect yourself and assure that I will have enough propane to get through the winter?  If you have not already done so, please contact CHS Larsen Cooperative and talk to our staff about securing your propane for Fall 2017 and Winter 2018.  We still have contracts available and would be happy to assist you with the process of locking in your supply.

by Kim Leisner, Energy Sales Manager

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