Feds release $450M to help ease propane shortage; $15.8M for Minnesota

As thousands of Minnesotans struggle with the price of the propane used to heat their homes and businesses, politicians at the state and federal levels are boosting aid to hard-hit residents and pressuring industry to try to end the propane shortage.

The U.S. Department of Health and Human Services released $450 million in Low-Income Home Energy Assistance Program funds today, $15.8 million of which will go to Minnesota residents.

The bump in federal funding for the federal energy assistance program comes only days after the state Department of Commerce announced that it raised the maximum amount of energy assistance that a household could receive from $500 to $1,000.

Gov. Mark Dayton will meet Friday with members of the state's Executive Council to seek a 30-day extension of an emergency executive order he issued Monday, which lifted restrictions on transporting propane and mobilized state agencies and the Minnesota National Guard to assist local governments in dealing with the crisis.

The price for residential propane in Minnesota shot up 91 percent in a week last Monday, to $4.66 a gallon, according to statistics from the U.S. Energy Information Administration.

The state set up a hotline Thursday for residents concerned about the high prices caused by the propane shortage. On the first day of operation, more than 80 people called the hotline at 1-800-657-3504.

"If people are looking for the energy assistance program, if they are looking for ways to find propane, if they have questions about alternate sources of heating for their homes, there's one number to call," said Minnesota Department of Public Safety spokesperson Doug Neville.

Neville said callers don't sound too desperate yet, but they're concerned about the gauges on their propane tanks falling as prices continue to rise.

Mollie O'Dell, spokesperson for the National Propane Gas Association, said the propane shortage stems from three sources: "cold, crops and cargo." The cold has increased demand for propane for heating this winter; a record grain harvest this fall led to quadruple the usual demand for propane; and the energy boom in the Midwest has resulted in some trains and pipelines now carrying crude oil instead of propane.

"We're actually producing more propane now than we ever have before because of the record natural gas exploration that's happening," O'Dell said. "It is a transportation and logistics problem that has unfortunately resulted in tight supply."

Officials at all levels of government said they're asking the railroads to consider carrying more propane. The American Railway Association has already asked its members to prioritize propane delivery. Dayton and other Midwestern governors had a conference call with Texas Gov. Rick Perry on Thursday to ask him to again extend a waiver that allows easier transport of propane from Texas.

Transportation isn't the only reason for the shortage. While propane production in the United States has increased in recent years, exports have too. Propane exports in the United States have quadrupled over the last five years, according to the National Propane Gas Association.

Dayton joined Minnesota's congressional delegation earlier this week in asking President Barack Obama to temporarily halt U.S. propane exports to deal with the crisis. Sen. Al Franken (D-Minn.) said the industry needs to consider selling more of its propane domestically.

"We definitely have to look at how much we export, certainly at a time like this," Franken said. "I've asked the president to use his authority to limit how much we're exporting at this time because he has a responsibility to make sure there's enough for an emergency. And this is an emergency."

John Zimmerman, a Northfield farmer and president of the Minnesota Turkey Growers Association, said his group has been talking with officials in Washington and owners of pipelines to try to prevent the propane shortage from getting worse.

"There's enough propane out there, and it's just in the wrong place right now," Zimmerman said. "We just need to work on our infrastructure to make sure that we can move product around the country safely and efficiently and to have propane when we want it and where we need it."

Zimmerman is using 200 to 300 gallons of propane a day to keep young turkeys warm.

"The price obviously has gone up, but it's our responsibility to keep our birds healthy and in a safe environment -- and we'll pay what we need to pay to get that done," Zimmerman said. "We're just hoping we can get the product at any price right now."

Zimmerman and other farmers say they are buying only the propane they need to last for a week to 10 days so they don't make the shortage worse for everyone else.