Propane prices still a concern
Roger Strom - The Business of Farming
It may not be making the headlines like it was a couple of months ago, but propane prices are still a huge concern for farmers and others that rely on the fuel. This winter’s 66 percent increase in Midwest propane prices and supply shortages have a lot of folks justifiably worried about next winter.
The best insight as to the future of propane prices comes from those in the business. They are using terms like “uncharted territory,” “new world” and “a new reality” to describe what is happening in their industry, saying propane exports are going to have the biggest impact on price.
According to the U.S. Energy Information Administration (EIA), U.S. exports of propane rose to 300,000 barrels a day in 2013, up 76 percent from 2012, with the U.S. becoming a net exporter of propane for the first time since EIA began tracking exports in 1973.
The export companies plan to spend $4 billion over the next three years to increase propane shipping capacity. Domestic demand and exports are now forecast to exceed propane supplies through 2020.
Chris Tews, president of the Wisconsin Propane Gas Association, was quoted in Butane-Propane News, saying the amount of propane exports and the effect that has on supply and price is “probably the biggest concern on my mind these days.”
“You throw a weak dollar in there and it’s such a bargain for these foreign countries to snap our gas up,” Tews continued.
For those of us in the Midwest, a change in the Cochin pipeline could also impact prices. The Cochin line supplies nearly half of Minnesota’s propane and is a major supplier for Wisconsin, Illinois and Iowa. The pipeline is in the process of switching the direction of flow, and instead of pumping propane to the U.S., they will begin pumping gasoline products from Illinois to Saskatchewan.
We can only speculate as to what will happen to prices next winter, but one way to stay informed is to follow national and state propane prices using the U.S. Energy Information Administration website, www.eia.gov.
Don’t focus on the national average price, but instead, watch the overall trend of propane prices to get an idea of what to expect as we get closer to the winter months.
The best advice is to stay in touch with your supplier. They’re the ones on the “front line” and in the best position to advise you on an action plan.
Having a backup heat source is another option. The distributors of wood burning, geothermal and solar products say they are already seeing an increased interest in their products, and waiting until fall to make a buying decision may be too late.