By Dana Hayward
The rising price of liquid propane has been a concern for rural customers nationally over the past several weeks. Although price hikes are not affecting Pagosa area residents as much as those living in the Midwest and Northeast, price increases are still affecting locals that use propane to heat their homes.
Propane prices may fluctuate due to a variety of factors, including crude oil and natural gas prices, supply and demand, cold weather, closeness of stored supply and markets served at a given point in time.
Residential propane use is highly seasonal and demand is highest during the winter months. Propane prices typically spike from October to March due to this increased demand in combination with difficulties in obtaining more supplies as demand heightens. Higher prices paid by wholesalers and retailers during these times are passed on to customers.
This year, national residential propane prices have reached record highs, soaring above $4 per gallon. According to a variety of sources, high prices are the result of a combination of factors including uncharacteristically low temperatures nationwide, the use of large amounts of propane last fall to dry wet grain crops, increased export and depressed stores at the beginning of the winter season. Distribution challenges are also contributing to currently elevated prices.
Nationally, according to the report published weekly by the U.S. Energy Information Administration (EIA), propane prices have risen from $2.76/gallon on Dec. 13, 2013, to $4.014/gallon on Jan. 27 of this year. The latest report indicates that national residential propane prices were $3.757/gallon on Feb. 10, down slightly from the Feb. 2 figure of $3.891/gallon.
In an effort to better understand the effect of rising propane prices on local residents, The SUN spoke with Rick Taylor, the owner of AAA Propane Inc., located on County Road 400, as well as Angela Selph, manager at Selph’s Propane Inc., located on U.S. 160.
According to Taylor, who has been in the propane business for 33 years, AAA Propane Inc. serves approximately 1,200 local customers who purchase and use varied amounts of propane monthly. Taylor cited widespread cold across the country as a likely reason for price increases, although he also discussed more localized distribution issues.
“We’ve lost at least four refineries in the last few years,” said Taylor.
Still, local prices aren’t as high as they are elsewhere in the nation. Taylor explained that suppliers in Ignacio have yet to increase wholesale prices too significantly, compared to some wholesalers in Conway, Kan. that were recently posting a high price of $4.75/gallon.
As of Feb. 10, the EIA report posts wholesale propane at a price of $2.608/gallon.
Selph explained that the industry is experiencing fairly typical seasonal supply and demand issues locally and that prices are nowhere near as bad here as they are in the East and Midwest. Although area retailers are selling propane by the gallon at the highest prices they have in a number of years, Selph explained that area supplies are not too low.
“I don’t think it’s time for us to panic supply wise,” said Selph.
Additionally, Selph offered advice to those that use propane to heat their homes and are working to save on fuel costs.
“Keep your blinds closed at night and on stormy days when your home doesn’t benefit from solar heat,” said Selph. “Residents can also turn down the thermostat, even a degree or two make a difference.”
According to both retailers, local propane costs have increased by approximately $0.30/gallon over the past month or so.
In Colorado, Gov. John Hickenlooper signed an executive order on Feb. 7 that declared a disaster emergency due to extreme winter weather and authorizes a temporary exception to the hours-of-service regulations for commercial motor vehicles used in the transportation of propane.
The measure is an attempt to ensure Colorado residents are able to heat their homes.
For more information about fluctuating and rising national propane prices, visit the EIA website at http://www.eia.gov/dnav/pet/pet_pri_wfr_dcus_nus_w.htm.