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What really happened in the propane shortages of the winter of 2013-2014? What steps can propane fleets take to protect themselves from similar issues in the future?

Question of the Month: During the winter of 2013-2014, propane shortages and price spikes were widely publicized by news media, and some fleets reported difficulty getting propane for their vehicles. What really happened and what steps can propane fleets take to protect themselves from similar issues in the future?

Answer: Several factors contributed to the recent winter supply constraints and increased propane prices, including record low temperatures around the country (the 2013-2014 winter was almost 30% colder than the previous winter), increased rain fall requiring additional propane supply for crop drying, pipeline outages (the Midwest Cochin pipeline shut down for three weeks in December 2013), Canadian supply constraints, and increased exports leading to reduced propane reserves. It is important to note, however, that while the demand for propane used to heat homes in colder months fluctuates, fleet demand for propane remains stable throughout the year. As a result, propane suppliers are generally willing to offer longer term fuel contracts to fleets at prices that do not vary during the winter. But fleet customers need to plan ahead and negotiate these agreements in advance. Don’t wait until the coldest day of the year to start asking questions. 

 Fleets should develop and maintain a long-term fuel contract based on projected consumption with their local propane marketer or fueling station operator. These contracts can provide a reasonably steady price for propane year-round, regardless of temperature fluctuations and other issues. However, fleets that fuel their vehicles at retail locations where there is no contractual relationship can expect to pay the current market price, which may be equal to or higher than gasoline during peak use periods. As such, the propane price spikes reported in the winter of 2013-2014 primarily affected fleets and drivers without fuel contracts.

 While some fleets with fuel contracts also faced supply limitations and price increases this winter, these incidences may have occurred as a result of other circumstances. For instance, some pricing contracts are set up to fluctuate based on a floating commodity price, or they might be indexed to automatically track gasoline or diesel prices. In addition, state fleets may be subject to certain fueling restrictions if the governor addresses energy supply issues through executive action. The prolonged severe weather this past winter resulted in several regions declaring official states of emergency. Similarly, fleets with bi-fuel vehicles, which provide the option to fuel with gasoline, may be subject to caveats during emergency periods that would not affect fleets with dedicated propane vehicles. To avoid unwanted disruptions in propane supply and price spikes, fleet administrators should closely review current and future fuel contracts and discuss various scenarios with their propane marketer to ensure that the contract terms match up with the fleet’s needs and expectations. 

Working with Propane Marketers

 Local propane marketers are present in most communities across the United States and can provide expertise and assistance in building fueling stations and deploying vehicles. Additionally, many marketers offer attractive lease options for fuel storage tanks, pumps, and dispensing equipment in return for a multi-year fuel supply contract. The cost of this equipment can be paid back over time through a shared savings or performance contracting agreement, virtually eliminating up-front costs to the fleet operator.

 The cost to purchase and install propane fueling infrastructure can be significant depending on the fleet’s choice of refueling options; however, fuel contracts can greatly reduce the financial burden. In most cases, the fleet is only responsible for the cost of infrastructure that cannot be removed from the site when the fuel contract is over, such as the electricity line or the concrete pad for the storage tank.

Current and Future Propane Supply

 While the issues last winter raised concerns, it is important to note that the supply of propane in the United States is on the rise. Propane is a by-product of natural gas processing and crude oil refining. In recent years, as natural gas production levels in the United States have increased, so has the propane supply from these operations. Between 2007 and 2013, the percentage of the U.S. propane supply produced from North American resources increased from 76% to 92%. As such, propane is not subject to the same types of energy security risks as petroleum based fuels that depend on foreign oil supplies face. 

 For more information on propane production and distribution, pricing, supply, and infrastructure, you can visit the following websites:

 

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FOA: Alternative Fuel Vehicle Deployment Initiatives

Energy Department announced up to $4.5 million to expand the use of alternative fuel vehicles through the Clean Cities program

We are pleased to announce a new DOE Funding Opportunity, which was posted on July 16th on the Grants.gov and EERE Exchange. 

The Energy Department announced up to $4.5 million to expand the use of alternative fuel vehicles through the Clean Cities program (https://eere-exchange.energy.gov/Default.aspx#FoaId334a63fc-6925-4d5a-a148-226905821333), including plug-in electric, natural gas, propane, and flexible fuel vehicles.  Through consumer outreach, training, and strategic planning, these investments will increase America’s economic, energy, and environmental security. Concept papers to apply for this funding are required and due August 1, 2014. Full applications are due October 1, 2014. You can view the full announcement here: https://eere-exchange.energy.gov/FileContent.aspx?FileID=1aec0ea7-0156-4423-9214-f1339b6e6b08.

This funding will support seven to fifteen deployment projects in three major areas: on-the-road demonstrations, safety-related training, and emergency preparedness. 

-Demonstration Projects (50% Cost share, $250,000 to $500,000 per award, 2-4 awards)

The first area of funding focuses on increasing the number of drivers that can experience alternative fuel vehicles first-hand.  Projects in this area will help potential buyers drive these vehicles for extended periods of time and gather data about their experiences. By increasing access to these vehicles through car-sharing, rental car, and commercial fleet leasing programs, more drivers will understand their benefits and be more likely to purchase them.

-Training (20% Cost share, $250,000 - $1,000,000 per award, 4-10 awards)

Projects under the second area of funding will develop and/or deliver training on alternative fuel vehicles to emergency first responders, public safety officials, and automotive technicians. This area may fund in-person workshops and on-line training courses to educate these vital personnel on safely handling and responding to incidents involving alternative fuel vehicles. 

-Emergency Preparedness (20% Cost share, up to $1,000,000, one award nationwide)

The third area of funding will support efforts to incorporate alternative fuels into city, state, and regional emergency management plans.  Because natural disasters often interrupt gasoline and diesel fuel supplies, alternative fuel vehicles and infrastructure can be valuable resources for disaster relief and emergency response teams. 

Applicants must register with and submit application materials through EERE Exchange (https://eere-Exchange.energy.gov), the Office of Energy Efficiency and Renewable Energy’s application portal.  For additional information about this funding opportunity, visit the listing on EERE Exchange (https://eere-exchange.energy.gov/Default.aspx#FoaId334a63fc-6925-4d5a-a148-226905821333).

Anyone interested in participating in this FOA should contact Louisiana Clean Fuels as soon as possible for more information on applicable projects under this grant opportunity.

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FREE Clean Fuel Webinar Hosted by PERC

Want to know more about propane autogas and what it can do for your company? 

The Propane Education & Research Council (PERC) is hosting a FREE webinar every third Thursday of the month.  Each webinar offers the latest in propane technologies, products, and trainings.  

On July 17th at 11:00 a.m. EST, ROUSH CleanTech will be discussing the impacts of propane autogas.  

About ROUSH CleanTech:

ROUSH CleanTech designs, engineers and manufactures propane autogas fuel systems for Ford commercial vehicles. The products range from the Ford F-250 all the way up to the Ford F-650, which is a great chassis for propane powered bobtails. Propane autogas vehicles offer identical performance to gasoline, while delivering lower fuel costs and reducing harmful emissions.

ROUSH CleanTech’s propane autogas fuel systems maintain the Ford factory warranty and conforms to both EPA and CARB regulations. ROUSH CleanTech provides training that educates customers on use and handling of propane autogas vehicles, maintenance and service requirements. They have an expanding service network with over 300 locations across the country and offer web-based training courses to technicians and managers interested in performing maintenance work on propane autogas vehicles. Also, to help better serve their customers, they have a toll-free technical hotline where technicians can speak directly with a ROUSH CleanTech field service engineer.

During the webinar you will learn: 

  •          The usage and success of propane auto gas
  •          How switching to propane auto gas can benefit your industry
  •          Proper use and handling: maintenance and service requirements of propane auto gas vehicles

 

Please join us during PERC’s Third Thursday Webinar to learn more about all the benefits that switching to propane autogas can bring to you and your company.

To register for the webinar click here

        

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Happy 4th of July from LCF!

LCF hopes you have a safe and happy Independence Day!

Here at LCF, we're proud to work toward advancing our nation's economic, environmental, and energy security by stimulating our local economy, facilitating the adoption of new transportation technologies, and making our community a cleaner, healthier place to live.

Nearly 100 other Clean Cities coalitions work to reduce petroleum use in communities across the country. Clean Cities coalitions and stakeholders have saved more than 5 billion gallons of petroleum since the program's inception in 1993. Led by Clean Cities coordinators, coalitions are composed of businesses, fuel providers, vehicle fleets, state and local government agencies, and community organizations. 

We'd like to thank all of the Louisiana Clean Fuels stakeholders for working toward energy independence!

                       

                     

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Upcoming Events

July Clean Fuels Events

This July, celebrate energy independence with Louisiana Clean Fuels. LCF has two great events that will educate and inform you on the clean air benefits of idle reduction technologies and on some creative ways to fund your alt fuel projects.

  • Cash’s Truck Stop Electrification Grand Opening – Thursday, July 17
  • Louisiana Clean Fuels Summer Luncheon – Friday, July 18


Cash’s Truck Stop Electrification Grand Opening Celebration and Cookout

Stop by Cash’s Truck Plaza at 420 Lobdell Hwy in Port Allen to celebrate their new IdleAir Advance Truck Stop Electrification (TSE) on Thursday, July 17 from 2:00pm-7:00pm. Thanks to Cash’s TSE, long-haul truckers can now sleep idle-free, knowing they are saving money on fuel, breathing clean air, and keeping our communities safe from toxic emissions. LCF appreciates the support of LDEQ for this impactful project. To read more, click here.

Louisiana Clean Fuels Summer Luncheon
We invite you to join us at the Capitol Park Welcome Center at 702 N River Rd. in Baton Rouge on Friday, July 18th from 11:30am-1:30pm for a free lunch and updates on LCF activities, upcoming events and guest speaker presentations. Guest presentations include "How to find money, save money and clean the air," and "Truck Stop Electrification case studies – A win-win technology,” as well as a mobile CNG fueling video presentation for small fleets. For more information about this event and to register, please click here.

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