UPS Invests in Propane for U.S. Delivery Fleet


UPS® (NYSE: UPS) today announced plans to purchase 1,000 propane package delivery trucks and install an initial 50 fueling stations at UPS locations. The investment in propane vehicles and infrastructure is approximately $70 million.

The propane fleet will replace gasoline- and diesel-fueled vehicles used largely in rural areas in Louisiana and Oklahoma with other states pending. The vehicles on these routes can travel up to 200 miles on a tank of propane. Operations will begin by mid-2014 and be completed early next year.

UPS, in collaboration with the Propane Education & Research Council (PERC), a non-profit propane technology incubator, worked with equipment manufacturers to secure certifications with the EPA and California Air Resources Board.

UPS tested 20 propane-powered brown delivery trucks successfully this past winter in Gainesville, Ga., and expanded its order with Freightliner Custom Chassis Corp. UPS uses a "rolling laboratory" approach to test different fuel sources and technologies according to their route characteristics. The new propane fleet is expected to travel more than 25 million miles and to displace approximately 3.5 million gallons of conventional gasoline and diesel per year.

"The opportunity to road test new propane vehicles and fueling equipment with one of the most sophisticated fleets in the country is a major milestone for the propane industry," said Roy Willis, president and CEO of PERC. "This announcement is the culmination of many entities bringing together the best in propane technology to achieve the greatest economic and environmental results."

The UPS deployment this year benefits from propane autogas' wide availability as a result of increased natural gas production in the U.S., and there is more price stability with the accessible supply. UPS currently operates nearly 900 propane vehicles in Canada.

UPS has one of the largest private alternative fuel fleets in the nation with more than 3,150 alternative fuel and advanced technology vehicles. This includes all-electric, hybrid electric, hydraulic hybrid, CNG, LNG, propane, biomethane, and light-weight fuel-saving composite body vehicles.

For more information on UPS's sustainability initiatives, review the company's 2012 Corporate Sustainability Report at www.ups.com/Sustainability. The upcoming 2013 report is to be released mid-year 

Important Information Inside!

Dear Friends,

 

I’m writing to inform you of the current happenings within the propane industry, as well as how we at Stanford’s are complying with the situation. Even before winter made its way into the U.S., a substantially greater than usual amount of propane was used in October-November to dry corn crops throughout the country. Then, as you may know, we here in Michigan as well as most all of the United States, have been experiencing colder than normal temperatures this winter season. The combination of these two items along with isolated sub-zero weather, severe ice storms, and continued snow falls across the U.S. has left the country in a bit of a crisis in regards to home heating fuel inventories and delivery logistics.

 

We are all working harder than ever with our suppliers, logistics companies, and you our customers to continue to keep everyone with propane supply this winter. Supply companies and terminals have all been placed on allocations and are only allowing marketers to get 60-70% of their contracted winter volumes of propane. So, with the supply allocations from our suppliers and the continued logistics of having to travel farther to get propane, we will have to make smaller deliveries to all our customers in order to keep everyone with supply. This means that instead of filling your tank to its maximum capacity of 85%, that we will be filling to say 50- 60% instead. This will help us to continue to keep all of our customers with propane for the remainder of this winter season. I want to assure you that we will continue to keep you warm this winter. We will also be suspending our Regulatory Compliance Fee until the allocations are lifted.

 

There are things you as a customer can do to help us as well, and we would greatly appreciate your help in this situation. Items like conserving propane by lowering your thermostat by a few degrees or consuming less hot water will help. Another simple thing you can do to help us ensure you receive your delivery is to keep your driveway and access to your propane tank cleared and free of snow. By keeping your driveway and access to your tank clear, it helps us tremendously. It allows the delivery drivers to make their deliveries faster, as well as, safer.

 

I thank you for your help… and for your continued loyalty as a customer of Stanford LP Gas.

 

Best Regards,

 

Jeremy Stanford

 

Severe winter weather causing New England to suffer propane drought

DOVER — Train delays aren't just plaguing travelers this winter. They're also hitting the wallets of tens of thousands of Granite Staters.

The United States Energy Information Administration reports that the price of propane, the primary heating fuel for nearly 70,000 New Hampshire homes, has risen 31 cents from $3.17 a gallon to $3.48 over the past five weeks. The primary reason for the increase is a propane shortage caused by fierce winter weather that has hampered the fuel's delivery to New England.

Joe Rose, president of the Propane Gas Association of New England, said that 75 to 80 percent of the propane used to heat New England homes is delivered to the region by rail. Rose said that only about 15 percent was delivered by train as recently as 2010.

“Because of the weather that we've had in the past few weeks — you know, the snow and the ice — there's been delays on moving rail cars,” said Rose. “When we get so dependent on a single form of transportation, when that form of transportation suffers delays, we don't really have a place to turn.”

Andrea Labelle, General Manager of the Canadian Propane Association, said this winter's weather has been exceptionally bad for trains carrying propane.

“I mean we're used to cold weather but this is absurd,” said Labelle.

The frigid weather has prompted the Canadian National Railway Company to place heaters on some of its rail switches to help keep trains moving. About 40 percent of Canada's propane is exported to the United States, according to La.

Rose said that propane suppliers are trying to make up for the shortfall by importing propane from overseas. The first shipment of about 10.5 million gallons arrived by ship in Providence, R.I., this week. Another 14 million gallons are expected to arrive within the next few weeks.

That will bring some supply relief, but won't necessarily ease the strain on New Hampshire residents' checkbooks.

The international propane will cost more than propane produced in the United States and Canada, according to Rose. And he expects prices for propane will continue to rise until the weather warms up.

Despite the increased cost of propane, requests for aid from the New Hampshire Fuel Assistance Program are running about the same as last year, according to program manager Celeste Lovett.

“We've had a spike ... with the cold weather, but our numbers (of people requesting assistance) have been pretty much consistent with last year,” she said. “If people are having trouble paying for their fuel they should contact their local community action agency to determine eligibility.”

Relief from higher propane prices is not going to be as accessible to users who don't qualify for assistance. Rose doesn't expect to see lower propane costs until the spring thaw enables trains to run freely again.

The good news — if you can call it that — is that propane should at least be available, albeit expensive propane from overseas.

Rose said, “I think what's going to happen from here on in is the retailers are going to be evaluating their supply. If they feel like they need more they're going to order more from another ship.”

Temporary propane shortage

NGALLSTON, Mich. - Many people may be looking to fill their liquid propane tanks. A temporary shortage across the Midwest has caused Michigan's governor to issue an energy state of emergency.

Prices in the Upper Peninsula are on the rise.

For more than 1,800 customers in the Marinette, Wis.-Menominee, Mich., area, heating their homes with liquid propane is a winter necessity.

“I just started burning wood, and that cut down on the amount of propane I need. Before that, I used almost a tankful just in two weeks,” said Rick Schnell of Ingallston, Mich.

But industry analysts say logistics in delivering liquid propane may be causing a temporary shortage of the resource.

“If you remember back in deer hunting, it was below zero, windy days, and then we had a big corn crop in the Midwest that required a lot of propane to dry it. So when you look at the combination of the two - cold weather and a big corn crop - it just put a big stress on the system,” said Steve Zutz, Country Visions Cooperative president and CEO.

Michigan Gov. Rick Snyder issued a state of energy emergency affecting those in the Upper Peninsula. Wisconsin has issued similar declarations. The orders allow propane carriers to drive longer hours to deliver the product from terminals like the one in Janesville to areas in need.

“The companies that truck our propane from the terminal to our tanks, that affects them because they're across-state-lines shippers and they have to adhere to federal guidelines for hours of service,” said Zutz.

Company officials say it’s supply and demand.

“We have a lot of our customers that have contracted, locked in their price from this fall and summer. But if they hadn't, then obviously the prices are going up. The prices are up probably about 50 cents a gallon from earlier this fall,” said Zutz.

Customers say it's a necessary part of rural living.

“I worry about the price, but what can you do? It's something you got to live with,” said Rick Schnell, Ingallston

Wisconsin, Michigan Propane Shortages Continue

For more than 1,800 customers in the Marinette, Wis.-Menominee, Mich., area, heating their homes with liquid propane is a winter necessity.

“I just started burning wood, and that cut down on the amount of propane I need. Before that, I used almost a tankful just in two weeks,” said Rick Schnell of Ingallston, Mich.

But industry analysts say logistics in delivering liquid propane may be causing a temporary shortage of the resource.

“If you remember back in deer hunting, it was below zero, windy days, and then we had a big corn crop in the Midwest that required a lot of propane to dry it. So when you look at the combination of the two - cold weather and a big corn crop - it just put a big stress on the system,” said Steve Zutz, Country Visions Cooperative president and CEO.

Michigan Gov. Rick Snyder issued a state of energy emergency affecting those in the Upper Peninsula. Wisconsin has issued similar declarations. The orders allow propane carriers to drive longer hours to deliver the product from terminals like the one in Janesville to areas in need.

“The companies that truck our propane from the terminal to our tanks, that affects them because they're across-state-lines shippers and they have to adhere to federal guidelines for hours of service,” said Zutz.

Company officials say it’s supply and demand.

“We have a lot of our customers that have contracted, locked in their price from this fall and summer. But if they hadn't, then obviously the prices are going up. The prices are up probably about 50 cents a gallon from earlier this fall,” said Zutz.

Customers say it's a necessary part of rural living.

“I worry about the price, but what can you do? It's something you got to live with,” said Rick Schnell, Ingallston, Michigan.

This is not the first emergency order. Michigan's governor issued a similar declaration back in January of this year.

LP, Natgas Run Higher as Demand Outruns Supply

December 5, 2013
By: Davis Michaelsen, Pro Farmer Inputs Monitor Editor

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Propane prices have moved dramatically higher and the current condition of both natural gas and propane stocks suggest limited downside potential for LP near-term. Hours of Service Waivers had been issued in eight Northern Plains states to allow delivery drivers to spend more time on the road amid high demand. Most of those waivers have since expired, but will remain in effect for North Dakota until December 6, and Wisconsin until December 15.

A late season demand push log-jammed supplies as much of the incoming crop was run through the dryer after harvest. Delivery trucks were quickly shuffled around the Midwest to keep deliveries moving to the farm, but the onset of cold weather now puts LP for dryer fuel in direct competition with propane for home heat.

prstussCurrent national propane stocks are 18.23 million barrels behind the same time last year and well below the bottom end of the five-year average. Meanwhile, U.S. natural gas stocks have fallen as well sending the January 14 contract above four dollars today, marking a 44 1/4 cent reversal from November 5's open at $3.52. EIA reports a 162 Bcf decline in stocks on hand this week, leaving the national supply 5.2 percent below year-ago and 2.8 percent below the five-year average.

Retail propane prices reported to your Inputs Monitor have been on the rise since July, now 30 cents above year-ago pricing at a Midwest average of $1.74. Given strong on-farm demand, low national stocks and a weather forecast that will have the Central United States in the deep freeze for the foreseeable future, prices for both LP and natural gas are likely to remain high

Propane Inventories Fall to Lowest Seasonal Level in 14 Years

Supplies of propane and propylene in the U.S. fell to the lowest level for mid-November since 1999 as domestic demand grows with exports at record levels.

Inventories dropped 2.44 million barrels to 58.4 million in the week ended Nov. 15, according to Energy Information Administration data. Exports have averaged 258,000 barrels a day this year, up from 171,000 in 2012. Propane can be used to dry crops during fall harvest and heat homes in the winter.

“What we have here is a really strong set of fundamentals for propane,” said Peter Fasullo, a principal at EnVantage Inc., an energy consulting firm in Houston. “We’ve had a really good crop-drying season, we have an early cold surge and we have strong exports. Add all that together, and it’s presenting us with a much tighter propane market than we’ve seen in a long time.”

Propane in Mont Belvieu, Texas, the largest storage hub in the U.S., rose 0.12 cent yesterday to $1.1875 a gallon, according to data compiled by Bloomberg. The price in Conway, Kansas, fell 0.5 cent to $1.205.

Crop Drying

Supplies fell the most on the Gulf Coast, where most of the U.S. export capacity is located. Stocks dropped by 1.82 million barrels to 31.3 million and dropped below the 10-year seasonal average for the first time this year.

Inventories in the Midwest slipped by 296,000 to 19.5 million barrels, the lowest level for this time of year since 1996. Crop-drying demand in the region has been larger than normal because of wet conditions and a record corn harvest.

Governors of Indiana, Iowa, Minnesota, MontanaNebraskaSouth Dakota and Wisconsin declared states of emergency in late October and early November to allow propane tanker drivers to work longer hours to make extra deliveries.

Crop-drying demand was at least 400,000 to 500,000 barrels a day over a several-weeks period,” Fasullo said. “That is winding down, but winter demand is starting to come in. That’s probably going to replace a lot of the crop-drying that occurred.”

400,000-500,000 Barrels/day equates to 16,800,000-21,000,000 gallons per day!!!

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At Stanford LP Gas, we feel our responsibility to our Family of Customers goes beyond just selling you fuel. We operate today on the same time-honored traditions of my father by providing excellent customer service, competitive pricing and peace of mind.

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