The Next energy crisis coming to rural America-Propane

Over the weekend while I was out getting fleeced at the grocery store, I ran into a gentleman who is the son of the owner of one the largest propane outfits in our region.

We got into a discussion about the future of propane and the concern his company was having.

I do not believe in coincidences and the timing was near perfect when I received notice of the article below from Confidential Reporter from Foreign Confidential.

This article is a perfect example of why I hold FC and CR in such high regard. How many of you have heard anything about the future of propane and the dangers this will bring to those who depend on propane and have few other options?

Here is a bit more on what I discussed with son of the owner of the propane business.


While I was out at the grocery store I ran into an employer I have assisted at work.

Anyway, this guy I was talking to is the son of the man who started the largest propane company in this region, which is VERY rural once you get away from the larger towns. They have been in business, the propane business since the early 1940s if I recall correctly.

We were discussing energy, the way this administration is literally choking off domestic supplies overall, forcing utility prices to increase dramatically or 'skyrocket' as promised by the potus. This person is right in the middle of propane, in every way you can imagine and he mentioned almost everything you will read about in the next post.

He specifically mentioned the way propane is obtained and how it is not extracted via wells, etc and that there is only so much propane and that at least here, they are very worried about what WILL, not might happen to propane prices and availability once exporting begins on a much larger scale. This is a company that is customer focused in a very depressed region of our state. We are not a state known for jobs and work stability in any industry. His company has rarely passed on any prices increases to their customers over the last three or four years. When they did it was a fraction of what other propane companies did pass on to their customers. They have seen the future and are extremely concerned not so much for themselves but their customers. They have customers that are generational, the children of previous customers. It is not unusual for this company to honor contracts that go back 15-20-25 years with a given family or even longer depending on the ties to the family. These are ranchers, farmers who depend on wood for heating much more than their homes and propane is the other main choice when wood is not feasible or does not make economic sense which is more common in these times.

Some of these places are 60-70 miles one way and they have delivery trucks that are gone overnight every week to bring propane to their customers. Many of these deals or 'contracts were first completed on a man's word and a handshake, then transferred to paper. I also know some of their customers and many of them have commented how this propane company has worked with them through these very bad economic times, letting them pay what they can afford to pay and make it up later on, or not paying anything at all until they could. The company knew that the propane they are providing maybe all that keeps the pipes from freezing and bursting in the milk barn, the barn, sheds that protect the cattle or other livestock or heat the home to keep the family warm when the temperature plunges to well below zero which is not unusual in a normal eastern Oregon winter.


Connecting the Dots: From Fracking for US Shale Gas to Exporting US Propane … at the Expense of Rural and Suburban Americans

By Confidential Reporter


Connecting the Dots: From Fracking for US Shale Gas to Exporting US Propane … at the Expense of Rural and Suburban Americans

In this increasingly interconnected and complex world, all politics is both local and global.

Take propane, for example, a fuel on which so many rural and suburban homes and businesses in the United States depend to heat their buildings and water and to power their kitchen ovens and stoves and outdoor barbecue grills (and standby electrical generators in case of electrical grid power failures). Propane, which is also called LPG (Liquefied Petroleum Gas) is produced as a byproduct of oil and gas production and refining.

Since propane is a byproduct--there are no propane wells--propane production is instantly affected by changes in the oil and gas industry.

Major Industry Change

A major industry change is about to occur, one that has potentially negative consequences for millions of aforementioned Americans.

For the first time ever, the U.S. is poised to become a net exporter of propane. The game changing development is a U.S. natural gas drilling boom--more specifically, a shale gas drilling boom--made possible by a controversial gas extraction method known as hydraulic fracturing, or hydrofracking, or, simply, fracking. It makes mining for natural gas deposits buried in deep, dense shale economically feasible. More fracking means more shale gas production, which means more propane production.

On the surface, this would seem to be a good thing since the price of propane, which, in the U.S. for some reason follows the price of oil rather than the price of significantly less expensive natural gas, remains crushingly high for ordinary, hard-pressed homeowners and small businesses. (U.S. propane companies claim prices are not high enough, citing weaker prices caused by increased propane production and an unusually mild winter as their reason for laying off workers during the worst economic downturn since the Great Depression.)

Poisoned Water

So much for surface impressions, which mean nothing in the energy business. Industry insiders say domestic propane customers won't benefit from increased production of the fuel because domestic supplies will tighten--and prices will actually climb--as the surplus is exported to Japan and China. Not for nothing are two large propane terminal expansion projects underway in Texas: U.S. producers can make more money selling their product abroad than at home.

More seriously, the same fracking that makes possible the shale gas production that drives increased propane production … threatens to poison water supplies. Seriously. Fracking uses significantly more water than conventional drilling with increased potential for permanent water contamination.

The toxicity evidence is mounting; as a result, fracking, which only recently became a household word in the U.S., is fast becoming a dirty word, too. (Some companies and politicians are proposing fracking with propane instead of water. Click here to read about this potentially explosive solution.)

Cruel Injustice

Rising opposition to fracking is the reason why President Obama in his politically charged State of the Union address called both for more natural gas production--to reduce reliance on imported oil--and for more regulation. Obama was clearly referring to the need for more regulation of fracking and for stricter enforcement of fracking rules that are already on the books yet too often neglected by gas producers.

A cruel joke--under the banner of energy independence. Unless natural gas fracking is stopped, rural and suburban Americans in the Northeast, say, whose homes and businesses typically cannot use natural gas to begin with because of their inaccessibility to natural gas pipelines, could soon find themselves in the worst of all possible worlds: plagued by poisoned water owing to a government-backed natural gas boom and as dependent as ever on costly, oil price-tied, tanker truck-delivered propane … while a few strategically situated companies in Texas profit mightily from exporting the gas to Asia.

Put differently, whereas in 2008 candidate Obama complained about (politically hostile) rural Americans who "cling to guns or religion," it is quite possible that in 2012 President Obama, facing a tough reelection campaign, will similarly complain, this time, about rural and suburban Americans who persist in clinging to their propane … and their water.

POSTSCRIPT: More about export-driven, U.S. propane terminal expansion plans here and here.

Original source is here.

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