Losing Line 5, an oil and propane pipeline that the governor of Michigan is trying to shut, would impose a significant constraint on U.S. energy supplies, according to the boss of fuel supplier Suburban Propane Partners LP.
“I think it’s a very misguided thought that we can do without the amount of propane and oil that comes in from Canada to serve some of the critical needs, particularly in the upper Midwest,” Mike Stivala, chief executive officer of Suburban Propane Partners, said in a Bloomberg TV interview. “I sure hope it lives.’’
Michigan governor Gretchen Whitmer has ordered pipeline operator Enbridge Inc. to shut Line 5, arguing that it is an environmental threat to the Great Lakes. Enbridge has refused to comply, arguing that the governor is exceeding her authority and federal jurisdiction applies. Line 5 supplies propane to Michigan homes, as well as light crude refineries in the U.S. Midwest and Ontario.
Propane prices hit the highest level seven years in early October but have pulled back a bit since then with mild fall conditions in the U.S. reducing the need for heating fuels. Still, propane prices remain elevated amid booming exports to Asia coupled with a surge in domestic demand from more residential use with the shift to working from home.
Stivala also said demand for propane has normalized over the past year as COVID-19 restrictions eased and industrial activity rebounded, meaning prices should be mostly driven by typical fluctuations in heating demand this winter.
“It's going to depend on the severity of the winter,” he said.
© 2021 Bloomberg L.P.
