Propane customers were surprised by price increases last week. Increases were caused by many factors, but Scott Bensink, Petroleum Department Manager and Monroe location manager for Two Rivers Cooperative, says that budget billing is one way avoid sudden, steep price increases.
The shortage of propane traces its roots back to last fall, when there was a wet harvest in the area. Farmers used more propane to dry their corn.
When winter began, the cold temperatures and windy days increased the demand for propane for heat. Supplies of propane could not be rebuilt fast enough. Meanwhile, the infrastructure that transports propane to Iowa customers is antiquated. Bensink believes new pipelines need to be installed, but environmental regulations make this process long and difficult.
The propane shortage and its factors are not limited to Iowa. Other parts of the United States are also dealing with record cold. If temperatures stay low, expect demand and prices to increase. Even this summer, Bensink does not expect prices to come back down to pre-crisis levels.
Two Rivers, and other gas companies, offer budget billing. This process allows customers to lock in a price per gallon, while establishing a monthly payment to keep their tanks filled throughout the year. Bensink said Two Rivers has many customers on budget billing already. He predicts there will be even more next year.
When prices increased, Bensink said the cooperative was doing its best to accommodate customers. The group is not out to gouge customers. When propane is delivered to homes today, not as much product is delivered, in an attempt to keep the cooperative’s costs down. Two Rivers is also holding enough propane on hand to meet demand, in the event no more can be brought in to the cooperative.
“The last thing we want is to not have any at all,” Bensink said. He hopes that the crisis will be a “wake up call” to the industry, to seriously consider upgrading propane infrastructure.