Not a great deal of new in the headlines this morning, but there is a looming date that propane people should be aware of and monitor. That date is May 12th, the date that Michigan’s governor has given (demanded?) Enbridge to shut down their usage of Line 5.
The pipeline carries up to 540,000 barrels of crude oil and NGL’s, and is a key source of propane for the state of Michigan and the Great Lakes Region.
Enbridge has signaled they do not plan to stop shipping barrels at the deadline, which means this battle will likely head to the courts. Canadian officials have been pleading their case to top American brass, including President Biden. However, President Biden already helped to shut down the Keystone Pipeline and one wonders if such please may fall on deaf ears. This item talks more about the looming standoff, including this ominous opinion: ‘Joe Comartin, Canada’s consul general in Detroit, said a shutdown would have “significant” impacts on both sides of the border. He predicted effects ranging from months-long propane shortages to higher costs for consumers to fuels being carried by rail, truck or boat — methods that he said are less emissions-friendly and more dangerous than a pipeline.‘
The primary concerns expressed by Michigan’s Governor Gretchen Whitmer are that the less than five miles of the 640-mile long pipeline that lie submerged in the Straits of Mackinac pose a potential ecological disaster in the making. The pipeline was built in 1953.
It should be noted that Michigan uses more residential propane on an annual basis than any other state, and storage facilities in the state of Michigan serve propane retailers in Indiana, Ohio, Pennsylvania and New York. In some severe winters, propane from these facilities can go even farther.
In a hypothetical scenario where Line 5 was actually not available to be used to ship propane this coming winter, the impacts of such a move would be widespread and quite damaging. Michigan retailers would be scrambling to source propane from alternate terminals and locations. Again, Michigan’s propane home heating demand is the largest for any state in the country. The spillover impact for supply locations in the Chicago region, the entirety of the states of Indiana and Ohio and like Pennsylvania would be significant. index or differential prices would likely see significant upward movements as the domino effect would ripple for hundreds of miles.
Again, that is a hypothetical scenario, but most of us have lived through winters (or even significant grain drying seasons, like November of 2019) where propane was hard to come by at our preferred source, and we had to seek less desirable options much farther from home, which puts an enormous strain on trucking, too. Michigan allows for jumbo trailers to haul propane, but such trucks are not allowed in adjacent states, so that would only exacerbate the challenges as demand for standard propane bottle trailers would be through the roof.
I realize this is a nightmare hypothetical I am laying out, but it’s not far fetched IF Line 5 gets shut down. It would also send a ripple effect through the entire industry, so just because you may not get your propane anywhere near Michigan, this would be such an enormous situation that the majority of retail propane gallons in this country would be ‘touched’ by it. We will keep you posted.
Much colder trends in the models over the weekend, as areas that were showing to be above normal as of Friday’s forecast, have flipped to colder than normal and some frost risks…Michael explains these risks in the video linked below.
Click on the image on the right to see projected low temps for Friday morning. You can see the freeze and even frost risk the models are calling for relative to late this week. CLICK HERE to watch today’s video