Supply or Logistical Challenges this Winter
Which one will it be?
Winter always brings the question, “Will we have enough energy supply?” Often our answer is “yes, but there will be logistical challenges.” The winter of 2022 – 2023 is upon us and we wanted to look at three Challenges that every propane or fuel distributor needs to be aware of this winter.
We want to give a big THANK YOU to the Propane Gas Association of New England for providing two helpful links that support one of our challenges.
Challenge #1 – Alternative Fuel Sourcing
A major utility in New England (Eversource Energy Letter) gave a letter to President Biden detailing the perils that are facing the natural gas market and potential remedies. Another utility in the same region wrote a letter (Groton Electric Light Letter) to their customers to fill fuel tanks to run generators and to use wood and/or pellet stoves.
What do these letters say?
Natural gas prices could be high. Utilities will look for lower cost fuels.
Our first challenge – power generators seek other fuel sources because natural gas is either too high priced or not available. We have heard this is already being discussed. Look for supply and logistical pressure on the propane and fuel markets in the Northeast if fuel switching occurs.
Challenge #2 – Railroad strike?
Most of North America thought this was averted a couple months ago, but this article (Nationwide rail strike?) shows that the prior brokered deal still needs to be approved by all 12 unions.
Specifically, three unions representing 30,000 members have voted it down and two other unions, representing 60,000 members, will vote next week. If there is not unanimous approval, then another potential strike threat looms on December 9th.
This should cause concern for anyone relying on rail supply for this winter. Even if the strike is resolved or only lasts a couple of days, rail shipment delays could last for several weeks and affect multiple regions within North America.
Challenge #3 – Loss of Regional Supply
For all of those individuals in the Central Plains, this one’s for you. The ONEOK fractionation facility at Medford, Oklahoma had a fire this summer and shut down. Propane and other fuels have not been provided since then.
A ONEOK executive said that there still has not been a final decision to “rebuild Medford or maybe build something else at Mont Belvieu.” The immediate impact is the removal of short-term supply from the market. However, the longer-term impact shifts supply to the U.S. Gulf Coast region.
Will there be Supply or Logistical issues this winter? Yes.
How to handle these Challenges? Identify the risks. Plan alternative strategies. Keep tanks full. Do not wait for the challenge to strike before taking action.
Are you in one of these impacted areas? Are you dealing with some of these challenges this winter? Reach out to your Westlark Advisors team to see how we can assist and help you plan for future winters as well. Check out our Westlark Advisors website or fill out our contact page to reach our team.
