Tahlequah Daily Press

February 19, 2014

Heating fuel prices falling

Staff Writer

TAHLEQUAH — For much of this winter, the prices of natural gas and propane have brought pain to many household budgets in Cherokee County. But thanks to recent developments, prices are decreasing, and customers are breathing a little more easily, as are their suppliers.

“Natural gas prices have gotten back down in the $5 to $6 range per decatherm,” said Jim Reagan, general manager of the Northeast Oklahoma Public Facilities Authority. “We are working with suppliers to get a new fixed price by March 31. A fixed price isn’t necessary, but it protects our customers. They aren’t as exposed to all the market volatility.”

The fixed wholesale price for NOPFA is $3.98 per decatherm, which does not include transportation and other fees.

“All the price movement we saw a few weeks ago was due to a need to move more gas where it was needed,” Reagan said. “They have succeeded in doing that, so the price is coming down. It hasn’t dropped down to its previous levels because now they are trying to refill storage.”

Reagan believes the warm weather of mid-February will “relieve the pain” of customers’ upcoming bills.

“I do believe everything will level out during the month,” he said. “There won’t be any panic. The [NOPFA] board and I are going to do everything we can to keep our rates the lowest in the state, like we have in the past.”

Propane prices also shocked many customers during the winter, but those have  dropped as well.

“We have ample supply,” said Paul Laney, owner of Liberty Propane Co. in Cookson. “When suppliers were cutting our deliveries to 100 gallons at a time, the propane supply increased. It got to the point where the refineries filled their tanks, and had to either lower the price or burn it. The price dropped by 50 cents pretty quickly.”

Laney said Liberty saw a high of $4.50 a gallon, but that prices in Cherokee County are “below $3.30 a gallon and falling.”

“I suspect it will continue to fall,” he said. “These warm weeks will help, and people have really been conserving. They have been closing off unused rooms and using alternative heating, such as wood. By this summer, it might be down to $2 a gallon, but I don’t expect it to fall below that, because this summer created a huge inventory drawdown, and producers will want to build it back up.”

The propane price spike may have further consequences for Liberty Propane and other suppliers.

“Some people have decided to switch to electricity,” Laney said. “Even with our price increases, electricity is still more expensive than propane, especially when you factor in conversion costs. Others plan to burn more wood or use other fuels. We expect to lose market share next winter, maybe as much as 25 percent.”

Reagan said it can be difficult to explain high prices or shortages to customers who live in Oklahoma, a natural gas-producing state.

“We have all this natural gas, and the price goes up,” he said. “But the price is affected by events nationwide because the supply is sent around the country. When the Northeast gets hammered by a storm, that affects a lot of people.”

Laney said the recent warm weather in middle of the continent belies conditions in the densely populated northeast.

“They’re still dealing with it,” he said. “They had winter weather today. We didn’t see $6 a gallon and we did have propane. The Department of Human Services gave out $4 million in heating assistance. As hard as it was in Oklahoma, we actually fared well compared to other parts of the country.”