PROPANE SHORTAGE: Could costs come down soon? - KMSP-TV

PROPANE SHORTAGE: Could costs come down soon?

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The soaring cost of propane has many Minnesotans wondering how they will afford to heat their homes, but some experts believe the worst of the shortage may be over and prices could come down soon.

On Monday, the price of a gallon of retail propane in Minnesota fell 20 percent from roughly $4 on Friday to $3.20. It's still a higher cost than last year, but industry analysts believe the peak has passed and prices are now on the way down -- but lots of volatility is expected.

Although some people may not realize it, it takes a lot of propane to keep baby turkeys warm.

"Roughly 50 to 100 gallons a day when they're young," John Zimmerman explained.

Given this year's unusually cold temperatures, the volatile propane prices are threatening Zimmerman's bottom line.

"If you can get it, what's the price? Nobody knows. 'Call me in 10 minutes,' it will be different. That's what we're dealing with right now," he said.

Some propane distributors have dealt with the shortage by rationing supplies.

"You can only get 200 gallons at a time because there's a shortage, they say," Lynne Crandall said.

State officials are concerned about price gouging, and some low-income customers are growing anxious to learn when the $15 million in federal aid will help them buy propane. On Monday, some small relief came as the price saw a significant drop for the first time in weeks.

"We'll just continue to see the prices trend downward," predicted Marty Lerum, with Propane Resources.

Lerum helps energy companies with risk management, and he says government pressure is providing results.

"We'll see a couple million barrels this month stay in the United States instead of being exported," he said.

Even so, there are still challenges to face before the market will settle down.

"You can't get it out fast enough," Lerum said.

Along with the record exports, propane inventories were already low due to heavy use by Midwestern farmers to dry crops. With the extreme cold that followed and dipped even into Southern states, many are now focusing on trying to avoid a repeat next winter.

Some energy experts predict propane prices will return to normal averages by the end of the month. Along with halting propane exports, industry groups are also working to open up more pipes to deliver to the Midwest.

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