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Senator On Indiana’s Propane Crisis

Posted On January 31, 2014

By Mike Perleberg

State Sen. Johnny Nugent (R-Lawrenceburg) provided

State Sen. Johnny Nugent (R-Lawrenceburg)
provided

(Lawrenceburg, Ind.) – Indiana’s propane shortage is causing a serious problem on two fronts for many families.

If they cannot get propane, they may not be able to heat their homes. If they can get it, they are paying more because the price per gallon has nearly doubled in just the last week. Indiana Governor Mike Pence has already declared an energy emergency in Indiana.

About nine percent of Indiana homes use propane for heating.

State Senator Johnny Nugent (R-Lawrenceburg) says the Indiana Senate is trying to rush through a bill that would allow for a tax credit on propane when it costs more than $2.50 a gallon. The tax credit would be retroactive to January 1 and could be used through this coming March.

“The high demand for propane is causing the prices to skyrocket and in many places the price has doubled. In fact, Indiana’s average price has jumped more than 40 percent in a week’s time to around $4.22 a gallon. There are many people around the state who are paying above the state’s average. Residents in Southeastern Indiana are paying upwards of $5 a gallon,” Nugent said.

The Southeast Indiana Economic Opportunity Center administers the Low Income Home Energy Assistance Program in for Dearborn, Franklin, Ohio, Ripley, and Switzerland counties. The organization suggests propane users not let their tanks get below 40 percent full because deliveries are taking longer.

Residents who need help getting and paying for propane can call SIEOC at (812) 926-1585 or toll free at 1-888-292-5475.  Households at or below 150 percent of poverty, or making about $35,000.00 a year for a family of four, may qualify for LIHEAP assistance.

A letter from Sen. Nugent is below:

Many Midwest states, including Indiana, are facing a propane shortage that threatens the thousands of Hoosier families who rely on propane to heat their homes.

According to the Indiana Propane Gas Association (IPGA), approximately nine percent of Indiana households use propane as a heating source. Farmers use propane to keep livestock warm and the manufacturing industry uses propane to operate forklifts.

The shortage has occurred due to several factors:

  • A late 2013 corn harvest, along with the cold, wet weather, resulted in strong demand for propane at distribution terminals.
  • A number of problems regarding logistics and weather have delayed the transportation of propane and prevented inventories from being fully replenished.
  • An unseasonably cold winter depleted inventory levels by 12.8 million barrels since Oct. 2013.
  • A record-setting year for propane exports.

The high demand for propane is causing the prices to skyrocket and in many places the price has doubled. In fact, Indiana’s average price has jumped more than 40 percent in a week’s time to around $4.22 a gallon. There are many people around the state who are paying above the state’s average. Residents in Southeastern Indiana are paying upwards of $5 a gallon.

To alleviate some of the burden Hoosier families are facing, a few of my Senate colleagues have offered legislation that would provide some relief to those who may be affected by the propane shortage. The proposed amendment would eliminate the sales tax on any propane bought for more than $2.50 per gallon.

If passed into law, customers would get a tax credit on their next propane bill to offset the sales tax paid on any charge over $2.50 per gallon. This credit would be retroactive to Jan. 1 and would be effective through March 2014.

For a homeowner with a typical 500-gallon propane tank paying $5 per gallon, this sales tax reduction would save them $90 on their propane bill.

The propane shortage has gotten so serious that Gov. Mike Pence has declared an energy emergency in Indiana. His executive order will ease transport rules for propane delivery trucks to speed up deliveries, and he also placed $5 million in a fund to help struggling families pay their energy bills.

I understand this may not be an option for some, but if you’re able to conserve propane, please do so. If you have any questions or need additional information, you can always contact me at Senator.Nugent@iga.in.gov or call 800-382-9467.