Propane

[carlkeigley]

While I was at the VA Hospital the other day, two nurses
were complaining so about the price of propane. They
were using $4.00 a gallon in their complaint. That was
hard for me to believe. They were trying to figure out how
much it takes and how long it lasts.

I told them I had a thousand gallon tank. And they responded,
"That's $4,000 to fill up." I told them under normal conditions,
one tank lasts me a winter. I was having a hard time believing
that fuel is $4.00 a gallon. Maybe Arkansas was sticking it to
them. I pass a propane company on the way over, but didn't
take notice. But I did on the way home. $4.40 a gallon....WOW.
From $1.89 a gallon to $4.40 a gallon. What a shock.

Wife told me everyone on Facebook was really complaining.
This week it has gone down to $3.90 a gallon. But it was rumored
to go up Thursday this week. I think I have 250 gallons or so left,
so am hoping it will last until the price goes to somewhere normal,
if it does.

Is this regional, or are others finding this problem relevant to your
area? It's said they're sending our propane up north and raising
our prices. There's no way to really know what really goes on any
more. I was driving truck when we could only get 35 gallons of
diesel at a time because there was a so called shortage...........

Whacha think?

[Carol H]

Is not just regional - it is according to CBC - Propane prices soar in Nova Scotia due to US Cold spell a supply and demand issue - says some states have declared an energy emergency as propane supplies dwindle.

[Nate R]

It's been a big story up here in WI this week. $4-5 a gallon up here as well now. Everyone's burning it this winter, supplies are running low.

Glad my house is heated w/ NG!

[mary and bob]

There's a big discussion about it over on the tnttt site, one of the participants delivers propane in Wyoming. He says the price will change a couple of times a day, and has got so high as to cause serious problems for low income people and Indians on the reservation. Also he gets a lot of flak when he's making his deliveries, for something he has nothing to do with. I heard the shortage was due to the US companies exporting too much causing a shortage here. Have we seen this before, there's a shortage of something, price goes way up, later price drops halfway back to original and we're all happy because the price went down! I delivered fuel oil part time one winter and had to listen to customers whine about how much it took to fill their tank, like I had anything to do with how much they used. No more of that, didn't renew my Hazmat license!

[carlkeigley]

Thanks for the article Carol. If it's supply and demand,
it will work out. Hopefully there's nothing political
connected. And looks like the propane is being sent
down to us........LOL

I heat with propane. I had them convert my all electric
home to propane because all electric is not good when all
power is lost and when you live in the tooolies, you rely
on your best decisions. Central heat won't work either, so
I have an alternative wall stove and a gas log in my fireplace.

It's about time to replace my central unit, so may be looking into
a outside fire/box unit to replace it. That would give me more
alternative to survive during other bad times.

[carlkeigley]

Bad thing about getting older, see enough to be suspicious no matter
what happens. I don't believe in out right shortages. Those I've lived
through turn out to be bogus. Like the diesel shortage. Supply and demand
will cause fluctuations. But really?

My aunt passed up a gas station when I was a kid because it was .33 a gallon.
I used to pass one station up for another over a penny or two. But now gas
is so high it's high even when found a little cheaper. I agree Bob. There's enough
created crises that just super inflate and then lower to half but still twice what it
used to be.

[Carol H]

Originally Posted by carlkeigley

Thanks for the article Carol. If it's supply and demand,
it will work out. Hopefully there's nothing political
connected. And looks like the propane is being sent
down to us........LOL

Yup apparently we are just being good neighbours and sending down along with water and oil our propane supply as well.... at least it sounds like your having to pay the same for the propane for now though -as we are apparently all short on it. Unlike the oil situation where we have more than enough to be your biggest supplier but yet you pay way less at the pump for it. I do know though the later is all political but thats on our side of the line not yours!

[SRD]

Yep, supply and demand seems to dictate pricing. But there are other factors. In our community someone put together a group purchase arrangement with a local supplier. As a result we pay between $1.60 - $1.90 a gallon depending on the time of year the purchase is made. Others outside of our group pay around $4.00 a gallon. The person who put together the group purchase allows suppliers in the area to submit their pricing once a year. The result being we agree to purchase propane from the company. There is no contract and no minimum amount to purchase. The only stipulation is that we must have a minimum 500 gallon tank.

I think one of the problems folks have around here is that they get tied to a tank rental agreement that prohibits them from purchasing propane from anyone other than from where they are got the tank. Having their own tank would obviously allow them to shop around.

[Carol H]

Here is a current Spot Price chart that shows the current problem.

Mont Belvieu Propane Spot Price Chart

[SRD]

Originally Posted by Carol H

Here is a current Spot Price chart that shows the current problem.

Mont Belvieu Propane Spot Price Chart

Useful for investment purposes but not necessarily relevant at the consumer level.

[Carol H]

Not necessarily true. All fuel suppliers make their purchases based on the index and they pay based on the index. If they are having to buy high that price gets past down to the consumer.

I was the party who did the large volume fuel purchases of various kinds for my company for years - normally done 30 to 60 days out. The spot price of the day or week and the trend would be the determining factor as to how far out I would purchase in hopes of getting a better price. If it looked like the price based on the index and the inside scoop as to what was causing the spike was going to keep going up I would lock in purchases for the next 60 days del'v sometimes more - if your sources indicate its a short term problem then you would only purchase enough to get you through until they came back down or hoped they did ;-). Any which way the price hike on the index gets passed down to the end user (the consumer).

[steve dunham]

Originally Posted by Nate R

It's been a big story up here in WI this week. $4-5 a gallon up here as well now. Everyone's burning it this winter, supplies are running low.

Glad my house is heated w/ NG!

Propane is $3.24/ gal at our local CO OP if you purchase 300 + gallons
It was $1.29 / gal back in late August before the crop drying season started.
Thank God for wood stoves and trees . One local propane supplier is charging $26.00 to fill a 20 LB tank

[Gina D.]

I pump the pane at a rural rv park. we charge 3.39 gal..in Washington State..where everything is taxed to heck.

[SRD]

Originally Posted by Carol H

Not necessarily true. All fuel suppliers make their purchases based on the index and they pay based on the index. If they are having to buy high that price gets past down to the consumer.

I was the party who did the large volume fuel purchases of various kinds for my company for years - normally done 30 to 60 days out. The spot price of the day or week and the trend would be the determining factor as to how far out I would purchase in hopes of getting a better price. If it looked like the price based on the index and the inside scoop as to what was causing the spike was going to keep going up I would lock in purchases for the next 60 days del'v sometimes more - if your sources indicate its a short term problem then you would only purchase enough to get you through until they came back down or hoped they did ;-). Any which way the price hike on the index gets passed down to the end user (the consumer).

In the situation you described, you chose to participate in speculative pricing, essentially shifting the risk from the supplier to the consumer, you in this case. As I stated earlier, not all consumer purchases of propane are this volatile. The price we pay for propane as a group is determined once a year when the agreement is made. The leverage we obviously have is the amount of propane involved. Suppliers (several of them) have consistently sought our business and the difference in the cost between our price and average individual consumer pricing has been around $2.00 a gallon at its peak.

[Carol H]

Originally Posted by SRD

In the situation you described, you chose to participate in speculative pricing, essentially shifting the risk from the supplier to the consumer, you in this case. As I stated earlier, not all consumer purchases of propane are this volatile. The price we pay for propane as a group is determined once a year when the agreement is made. The leverage we obviously have is the amount of propane involved. Suppliers (several of them) have consistently sought our business and the difference in the cost between our price and average individual consumer pricing has been around $2.00 a gallon at its peak.

A group buy should expect to have some savings, as you are after all doing exactly what i was doing and speculating on the market price (all be on a longer term) & buying in bulk (except on a much smaller scale). By locking in a price you are in fact speculating that the price you agreed to is better than what it will be in the future. It is possible for all fairly large consumers of fuel products to negotiate a locked in a price for a set period of time whether they be a private party or a public corp. either way though what the index is at the time of the price negations and what the markets current trend forecast are will dictate what the rate is the supplier agrees to in the end. Only difference is most major fuel brokers/suppliers are reluctant to lock in with larger volume customer such as my company and most larger scale purchasers are equally as reluctant to lock the price in beyond 90 days (which is the longest most will do it) as historically over a few years that doesn't work in their favour. Works well for at a smaller level of end user/consumers though as there is no gamble as to what the index is going to do on a day to day bases and makes balancing the budget less stressful. The profit and lose margin for either side at that scale isn't as big as it would be with a *much* larger contract/volume of fuel. Easier for both sides to live with should the market take a wild swing one way or the other.

Here a homeowner can sign up for a year of set pricing for their natural gas supply through a number of different brokerage type firms as well, again though for most that has not proven over the course of a year or two of ups and downs in pricing to be an advantage. But then again may homeowners prefer having one set price to pay rather than speculating on their bill going or down each month.

[SRD]

Carol H,
We are not speculating and not buying in bulk. As stated before, there is no contract with a supplier and we are not obligated to purchase any amount of propane from them. The only agreement or maybe better put, an understanding, is that the supplier will sell us the propane for a specified amount. Individuals from the group are free to purchase from whomever they want. Granted, the supplier could stop honoring the deal at any time but that hasn't happened in all the years this has been going on. I've had this discussion with others outside of our community and they've expressed interest in setting up something similar but haven't been able to gain any traction either because of a lack of community interest or limited numbers in the potential group.

[Briantb]

We just had propane delivered in NW Ontario.. Same price as we paid in October..... 0.779 per litre Cdn dollars.. Our price has always been set in September for the year.. I was wondering if that would hold true after all the letters to the editor for automotive propane going up but no worries

[Donna D.]

One person making a small purchase will always pay more. A whole bunch of people ganging to make a purchase (one year or so in advance) will typically pay far less. No matter what the supply/demand is. The company I work for pays MILLIONS for diesel fuel a year... what do you think we do? Speculate, write contracts and hope for the best. One person buying retail shouldn't complain... y'all are competing for supply when supply is at it's lowest...

[Mike Magee]

The colder than usual weather has caused a spike in LP usage. Here in OK, Gov. Fallin ordered a temporary easing of driver restrictions so as to allow more LP to be trucked into and around the state more quickly. And yes, the price is up. I have 40 lbs (2 20 lb tanks full) I can sell you if you get too low, Carl...

[carlkeigley]

Originally Posted by Mike Magee

The colder than usual weather has caused a spike in LP usage. Here in OK, Gov. Fallin ordered a temporary easing of driver restrictions so as to allow more LP to be trucked into and around the state more quickly. And yes, the price is up. I have 40 lbs (2 20 lb tanks full) I can sell you if you get too low, Carl...

LOL............don't tell anyone but I have another thousand gallon
tank out behind the church. I could have them pump it out of that
one and put it in to the one behind the house.