People who use propane for home heating are in for a shock.
Bloomberg News reported that prices for the fuel in the Midwest have surged to a record high as the recurrent cold snaps push demand. At the same time, exports have depleted reserves of the fuel.
CNN reports a growing concern about propane shortages and notes that prices of propane for delivery in January leaped 50 percent in just one week. Meanwhile, John Demopoulus, a commodities analyst at Argus Media, said supplies are 40 percent below average.
Prices have spike more than 17 percent from a year ago, according to the U.S. Energy Information Administration. The Associated Press energy writer said that propane users who need to refill their tanks could pay $100-$200 more per fill-up than a month ago. Spot propane at the Conway, Kansas, trading hub jumped 70 cents to $2.45 a barrel – the highest since at least January 2008. Wholesale prices at the Mid-America Pipeline Co. terminal in Conway ranged from $2.16 to $2.62 per gallon, the most in records going back to 2007.
According to the Energy Department, 5.5 million households heat with propane, mostly in the Midwest and South. Propane is used by more than 12 million households across the country, according to an industry trade group.
Earlier this month, natural gas consumers were warned to expect sticker shock as their utility bills would increase. Demand has driven use to record levels and CenterPoint said that natural gas bills could double.
Propane is also used in agriculture. Propane supplies were a problem last fall as Minnesota farmers hustled to finish their harvest. Gov. Mark Dayton signed an emergency order to exempt truck drivers who haul propane from driving restrictions. Governors in Wisconsin, North and South Dakota, and Iowa signed similar exemptions. Farmers relied on the fuel to dry corn before storing it in elevators; this year's crop had an exceptionally high moisture level.