Tahlequah Daily Press

Local News

January 29, 2014

Propane prices seeing record highs

TAHLEQUAH — With much of the country experiencing bouts of record cold, many propane customers are also in the grip of a squeeze on supply, which has driven prices of the commodity to record highs.

While local suppliers say they are not in danger of running out of propane, their stocks are reduced and their purchases cost more.

“Everyone is having some problems,” said Paul Laney, owner of Liberty Propane Co. in Cookson. “I’ve been in this business a lot of years, and I’ve never seen anything come close to this.”

The Energy Information Administration listed the Jan. 20 price of a gallon of residential propane at $2.96, an increase of 60 cents in three months and the highest price ever recorded by the agency.

Prices are higher where the shortage is more acute. Prices are $4.30 a gallon in the Midwest after hitting a peak of nearly $5 a gallon. Inventories in the Midwest are 35-40 percent lower than last year.

Reasons cited for the shortage include a colder-than-normal winter, the shutdown of a major pipeline for maintenance, temporary shutdowns at refineries and high precipitation during autumn, which required farmers to use more propane to dry corn harvests.

“There is a pipeline that runs from Kansas to Tulsa, which was shut down in the spring,” Laney said. “That didn’t create a problem with supply, but with distribution. Then we had a record corn crop from Oklahoma to the Canadian border, and it was a wet crop. That created a true inventory drawdown. Then we’ve had a record-cold winter and people are using a lot of propane, especially back east and around the Great Lakes.”

To stretch supplies, Liberty is limiting deliveries to 100 gallons a week, and Laney said the policy is having an effect.

“The price has come down 48 cents in the past week, though I am about a week from selling my old propane load before I can buy at the new price,” he said. “Also, it is less expensive to buy 100 gallons than 500 gallons. It has just been a freaky year. I really do believe the price will go down as quickly as it came up.”

Laney said consumers should remember that energy markets are not driven entirely by supply and demand.

“Propane, oil, natural gas are all highly speculative,” he said. “They trade on rumors and trends. When propane supply problems hit the national news at the beginning of January, Wall Street opened and the price of propane rose a dollar a gallon in one day of trading. They couldn’t wait to get to the office and buy propane.”

Customers can also stretch their supplies if they take some simple measures.

“Close off any rooms you don’t need to heat,” Laney said. “Lower the thermostat and wear some extra clothes or a blanket. If there is plenty of propane in your tank, don’t order more. I know it is human nature to add fuel to the tank even if it is half full, because people are afraid they will run out.”

Simon Bowman, manager of investor relations and corporate communications for Americas, said customers should clear snow and ice from tanks, pipes and vents, and keep paths clear and wide enough to accommodate a propane truck.

“They should use extreme caution when using portable generators powered by gasoline, diesel or propane,” he said. “They can also ‘button up’ their homes by checking caulking around doors and windows and sealing air leaks.”

Shortages have led 24 states, including Oklahoma, to raise limits on driving hours for operators of propane transport vehicles. Typically, a driver can drive 11 hours between rests, but many states are temporarily permitting 14 hours without a rest period.

Gov. Mary Fallin signed an executive order, allowing propane truck drivers from out of state to transport the fuel into Oklahoma without acquiring a license. The order is effective until Feb. 4.

About 11 percent of Oklahomans rely on propane deliveries to heat their homes and operate gas appliances.

srowley@tahlequahdailypress.com

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