Supply: Logistics Issues Mount

Winter is here and NPGA’s Propane Supply & Logistics (PS&L) Committee recognizes the logistics issues facing the nation’s propane industry, especially in the Rockies and westward. Between colder weather leading to higher demand, significant price differential between natural gas and propane causing instances of “propane rejection” where propane is used for onsite power rather than sent into the market, and rail embargoes and backlogs in the Pacific Northwest, many marketers are being warned of, or already seeing, supply issues in these regions.  For a quick primer on propane rejection, click here: https://www.lpgasmagazine.com/how-propane-rejection-could-impact-supply-pricing/amp/

Among other things, NPGA has been coordinating with state propane gas associations, rail groups in the Pacific Northwest, midstream companies, and the FMCSA.  NPGA has submitted a formal request to the FMCSA for a widespread regional (or nationwide) hours of service waiver.  NPGA believes FMCSA will make a decision on the request today (December 22).

All regional and intrastate hours of service waivers are listed here: https://www.npga.org/news-resources/hours-of-service-exemptions/

A few things to remember:

• The sooner you make arrangements for additional supply sources, the sooner it will be available.
• Typically, shortages in PADD 4 and 5 require assets to move from PADD 2 or 3, which means more miles with higher freight. Sometimes there is a domino effect of moving assets across PADDs. Please be aware of your inventory levels and make sure you are communicating, early and often, with your suppliers and transporters.
• Have you checked out NPGA’s PLAN app? The NPGA’s Propane Logistics Analysis Network (PLAN) app allows users to view and/or share reported wait times at supply points. For more information about the app, click here.
• NPGA has the ABCs of Supply Preparation as a reference, located on the member dashboard, as well.

Lastly, if your company has received a force majeure notice or similar e-mail restricting propane because of rejection or going on allocation from your midstream vendor, please sent such notice to [email protected] or [email protected] – FMCSA requires hard data when making decisions on hours of service waivers, so the more information NPGA has the better case we can make for the industry.