Gas prices stress suppliers, buyers Gas prices stress suppliers, buyers By:Scott Witten, Staff writer December 27, 2000

LUMBERTON - A harsh winter combined with rising natural-gas prices could hit consumers hard - particularly those on fixed incomes, according to home heating oil dealers in the county.

Propane gas - the fuel that most people use to heat with - has gone up 25 to 35 percent in the past two weeks, according to Don James of M&J Gas Company in Lumberton.

The price of propane increased another 4 cents on Friday.

"It just doesn't make any sense," said James, M&J president. "To go up 36 cents since the Dec. 1 is just not right. The public doesn't understand and I can't say I understand it much either. In my 25 years in business, I've never seen these kinds of increases."

Retailers not only have to deal with higher prices, but shortages in the supply as well. James said because of the cold weather, there is a higher demand for propane. To offset that demand, retailers like M&J are only allotted a certain amount of propane on certain days. M&J received an allotment of about 10,000 gallons earlier this week and will not get another until Christmas Eve. James said if it was not for the help from his competitors, he would have run out of propane by the end of Friday.

"I just hope people know what we're up against," he said. "I take their calls so I know that a lot of them think we're making money off this. But believe me, our profits don't improve."

Propane gas is selling for between $1.58 and $1.68 a gallon in the county, compared with an average price of $1.09 last winter. Propane is a by-product of crude-oil refining and natural-gas processing.

The price of natural gas has also increased. The price of natural gas has been increased five times in the last year, according to Keith Poston, a spokesman for Carolina Power & Light Co., which recently bought North Carolina Natural Gas. The last increase was in November. There is another increase planned for January.

Poston said the average monthly heating bill for a home that uses natural gas was $78.39 in 1999. This year, it is $126.96.

"That is an increase of almost 62 percent. What we're seeing is very unusual," Poston said. "Energy costs across the board have skyrocketed. But people should know that we don't make a single dime by raising fuel cost. We're having to pay more too."

Both Poston and James say the people hurt most by these increases are the poor.

"The price of propane is steadily going up," James said. "This is going to be terrible for people on fixed incomes who already have to worry about things like buying medication."

Paul Hunt, manager of Lindsay-Campbell Oil Company in Lumberton, agreed, saying the problem will only be compounded by an extended cold spell this winter. Thursday was the first day of winter.

"This winter is colder than last year's, which was relatively mild," Hunt said. "So not only will the propane cost more, but people will have to use more of it to stay warm. And winter is not even really here yet."

Hunt said he expects things to get worse before they get better. He said the price could reach $2 a gallon soon.

"I don't see any relief in sight," he said. "I feel sorry for the customers. I know they are having a hard time coping with this, especially the poor."

Rose Riccetti, a spokesman for the National Propane Gas Association, said the price of propane has risen because of record-breaking natural gas prices, continuing high crude oil prices and local distribution problems.

Riccetti said Wednesday that the higher prices are caused by factors beyond the control of retail propane suppliers. Some refiners who normally produce propane by refining crude oil are now using that propane to fuel their own refineries instead of selling it to retail distributors, she said. With the price of natural gas about four times its normal price, refineries have little choice, she said.

As a result, thousands a barrels of propane are removed from the market each day, affecting the more than 8.1 million homes and businesses in the United States that use propane for heating needs.

"These are the kinds of problems that cannot be anticipated by the propane-gas industry," said Patrick Chesterman, chief operating officer of Ferrellgas Inc. of Lumberton.

"When the price of propane's feedstock fuels escalate as rapidly as natural-gas prices have, causing refineries and gas processors to remove large quantities of propane from the market that would normally be made available for eventual sale to homeowners and other end-users, the retail marketer is powerless to charge things," he said. "The higher cost of propane means higher costs, not higher profits for the retail marketer."

Consumer tips

James suggests that consumers turn thermostats as low as they can tolerate.

"We're asking people to turn to reduce the amount of propane they use, because it looks like it is going to be a tough, tough winter," he said. " We're going to do our best to scrape and scrounge to keep our customers served, but they will have to do their part as well."

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-- Martin Thompson (mthom1927@aol.com), December 28, 2000