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February 11, 2014
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Propane prices surge in Grand County

As Arctic chills settled throughout the Midwest this winter, propane prices in Colorado have spiked, with Grand County customers feeling the affects.

Prices soared from $2.48 a gallon in December to as much as $4.95 last month, according to Charlie Brown with Independent Propane in Granby. The $4.95 peak lasted only a day and prices have since come down, hovering around $3.95 a gallon, but the increase is still causing significant trouble for county residents who depend on the fuel for heat.

“Nobody’s happy about it, that’s for sure,” Brown said. “And we’re not happy as well.”

According to Brown, the average residential propane tank is around 500 gallons, and is refilled every month or so. He’s been working with customers to refill tanks with as little fuel as possible until prices recede to more affordable levels.

The propane price surge came after a perfect storm of an unseasonably wet summer and unusually cold winter. Midwest farmers used more propane than usual during harvest season to dry crops like corn and soybeans. Then, when the polar vortex settled in, demand skyrocketed for already depleted propane supplies.

“Speculators were watching, and it took off from there,” Brown said. “It’s supply and demand.”

According to Scott Penson with the Grand County building department, most homes and businesses within Grand County towns first started using electricity for heat. Around the late 1970s, electric prices escalated and natural gas lines came to the county, so most residents switched to natural gas as their heating source. But for homes in more rural areas, or even half a mile away from a main highway, connecting to a natural gas line was too expensive. Instead, those residents use propane for heating.

Although he doesn’t have exact figures, Penson estimates around 60 to 70 percent of homes outside town limits use propane.

“I’ve been following this since they had the cold snap back east,” he said. “I kind of figured this would happen sooner or later.”

On Monday, Feb. 10, the Federal Energy Regulatory Commission invoked its emergency authority to prioritize propane shipments from Texas to the Midwest and Northeast to help alleviate shortages.

The cold weather’s impacts aren’t limited to propane customers. Nationwide, average heating degree days are 8 percent higher than the 10-year average, meaning weather has been significantly colder, especially east of the Rocky Mountains.

The U.S. Energy Information Administration, or EIA, reports that this season’s heating demand has created two record-breaking weekly natural gas stock draws. EIA also reports the cold weather could impact natural gas production.

As temperatures warm and demand eases, EIA at least expects propane prices to wane. In its most recent short-term energy outlook, released Feb. 11, the EIA said it expects propane prices in the Midwest to fall from $3.83 a gallon to $2.41 for the rest of the winter. It’s still 39 percent higher compared to last year, but a lighter burden for customers who depend on the fuel for heat.

Brown at Independent Propane gets his propane from markets all over, including Wyoming, Denver and Kansas. He said there’s not much he can do to provide relief to his customers, other than give minimal fuel deliveries, but he’s at least starting to see a slow decline.

“It has been a roller-coaster ride,” he said. “It’s refreshing to see the market starting to come down.”

Leia Larsen can be reached at 970-887-3334 ext. 19603.


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The Sky-Hi News Updated Feb 14, 2014 12:05PM Published Feb 11, 2014 05:57PM Copyright 2014 The Sky-Hi News. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.