Critical situation for propane due to CN strike

Quebec would have reserves for 24 hours before supply is compromised

More and more voices are calling for government intervention following the strike by CN employees, which began at midnight on November 19. The director general of the Quebec Propane Association, Raymond Gouron, says it bluntly, the sector is in emergency mode. He indicates that propane companies in Quebec have filled up their warehouses in anticipation of the conflict, but that the situation is critical.

Since 80% of the propane is transported by rail, the distributors depend on the proper functioning of the transport. ”If the supply does not resume within 24 hours, we will have a serious problem. Some suppliers have started to rationalize propane for a long-lasting strike. ”

The situation is all the more worrying as the needs in the agricultural sector are enormous at the moment, due to the very wet conditions during the harvest. “The consumption of propane is a real rolling fire for drying grains. Due to the wet fall, demand is excessively high, ”reports Mr. Gouron.

The Canadian Propane Association had already sent a letter last Friday to the outgoing Minister of Transport, Marc Garneau, requesting an intervention. “Timely delivery of fuel is crucial in order to ensure the continuation of the essential activities that propane makes possible,” said the group. “Although we hope to have fewer problems this year, we are again facing difficult weather conditions during the crop drying period, especially in Saskatchewan, Alberta and Manitoba. With the strong seasonal demand for propane for domestic needs and many other uses, it is essential that the transport of propane is not interrupted. At this critical time of the year, a work stoppage at CN would be extremely harmful to the propane industry.

Quebec is not the only province to have significant propane needs. The western provinces also experienced difficult conditions this fall.

For Quebec grain producers, it is another tile that falls on them after the strong winds of late October and the snowstorm that paralyzed grain corn crops.

Mr. Gouron indicates that a request has been made to several federal departments to activate the emergency plan provided for in this type of situation.

Propane requirements are also significant in the United States. Nine US states in the Midwest declared a state of emergency at the end of October, which was later extended last Friday. The state of emergency aims to circumvent for the moment the hours of service or the limits concerning the loading of delivery vehicles. Federal motor carrier regulators subsequently issued a regional exemption covering these states, as well as Illinois, Kansas, Missouri, South Dakota and Nebraska, in order to address local shortages compounded in part by a failure on a pipeline in the Midwest.

Rising prices

Difficulties in the supply to the United States and the early cold have pushed propane prices up since the start of November. Carine Bergevin-Chammah, economist at Études Desjardins, explains that the increase is temporary and should be absorbed with a drop in demand and a regulation of the delivery of propane in the regions where demand is highest. “Stocks are quite high right now in the United States and are quite large. the situation and really related to the difficulties of bringing propane into the Midwest and over long distances. Oil prices are estimated to remain at the same level as they are today. So there is no increase forecast for propane.”

The economist believes that the price reaction is mainly related to the surprise effect since the rise was sudden. She noted that prices for North America are lower today than they were last year on the same date. And since propane is a commodity traded on public markets, Quebec is still sensitive to what is happening in the United States. Market prices climbed 13.5% in one month, but are 31% lower than they were in November 2018.