Published Sunday, September 10, 2000 Propane rates causing concern

Last modified at 12:18 a.m. on Sunday, September 10, 2000

By Kris Epley The Independent Staying warm during a Nebraska winter isn't always easy. And for propane users this year, it probably won't be cheap, either.

Propane prices, like gasoline prices, have climbed steadily in the last year and now stand about double the rates at this time last year.

Area suppliers don't expect those rates to show much improvement as the winter months edge closer.

"The market is setting itself up for an increase," said Jim Schall, area petroleum manager for Aurora Co-op.

Propane prices are now about 90 cents a gallon. Prices started climbing last fall and have continued escalating, especially in the last six weeks, thanks to the continuing ups and downs in the petroleum market, Schall said.

"Propane is derived from crude oil, so propane prices follow gasoline as well as natural gas markets," he said.

Also contributing to rising propane prices are last year's depleted inventories.

"Inventories for propane last year came out very short," Schall said. "They've been trying to build back up, and until recently, they haven't really been getting that done."

The last two propane reports, however, indicated that reserves may finally be rebounding, he said.

Schall said high propane prices will likely be around at least through the winter.

Ken Caldwell is vice president of Bosselman Energy, which has propane tanker operations in Grand Island, Kearney, Hastings, Central City, Wood River, Holdredge and Gothenberg. He said propane prices are not as volatile as gasoline prices.

But the price of propane recently jumped 8 cents to 10 cents a gallon, he said.

"It has gone up in the last couple of weeks," Caldwell said. "And everything we've seen or read in the industry publications points to that trend continuing."

Propane suppliers in St. Paul, Ravenna, Wolbach and Broken Bow were unavailable for comment.

Much of what happens to propane prices -- and even availability -- will depend largely on the severity of winter weather. If conditions are mild and supplies remain at certain levels, propane prices might stabilize.

But if winter brings prolonged cold, propane inventories could begin to slip, and prices could edge up even further, Schall said.

"If it gets really cold and (we) have more demand and don't have the inventory built up, propane could go over $1 a gallon this winter," he said. "It will just depend on the circumstances."

There is one bit of potentially good news on the horizon, however.

"One good thing is that it doesn't look like there'll be much grain drying this year," Schall said. "So that will mean less demand for propane during that time. And that's more that's available during the winter."

While there's no way to ward off high prices, Bosselman's and Aurora Co-op have programs to help customers deal with high heating bills.

Each company has a contract program that allows customers to lock in propane prices for the winter, guaranteeing that, even if the price continues to rise, they'll continue to pay the going rate at the time of the contract agreement.

Several payment options are available. Customers can choose to pay for their projected winter propane purchase at the time the contract is drafted, or they can opt for payments over several months.

They also can make down payments on the propane they will buy through the winter under the contract, paying a deposit of 6 cents per gallon or 10 cents per gallon to lock in a price.

"We want to make this as easy and painless as we can for our customers," Caldwell said. "There are fewer surprises for them this way, and it gives them a way of knowing exactly what their costs will be through the winter."

If propane prices fall below the contract price, customers of both companies are charged that lower price.

Bosselman's has offered the program for many years, while Aurora Co-op implemented the program about four years ago.

Heartland Co-op in Wood River offers a similar program.

Schall and Caldwell encouraged propane customers to contact their suppliers to inquire about contract programs.

"They should listen to the news to keep up to date on the prices, get stocked up early and check with local suppliers about programs that can help them out," Caldwell said. "They need to ask questions and be informed consumers."

While it looks like higher propane prices are here to stay for a while, Caldwell said that situation, like others in petroleum-related industries, could change overnight.

But he's not ready to venture a guess as to the immediate future.

"Our crystal ball is as cloudy as everybody else's," he said.

http://www.theindependent.com/stories/091000/new_propane10.html

-- Martin Thompson (mthom1927@aol.com), September 14, 2000

Answers

I just mentioned propane on another nearby thread. Actually, this is in the shortest supply of all energy products I would not want to live in the upper Midwest this coming winter.

-- JackW (jpayne@webtv.net), September 14, 2000.