Lower propane prices, colder winter expected
October 17, 2012
Residential propane prices in Nevada County are at a three-year low, but with meteorologists predicting a colder winter than a year ago, energy officials expect use will outpace American's 2011 consumption.
"The prices haven't been this low since the last election four years ago," said Kathy Marcione, an office manager at Ace Propane in Grass Valley.
Since most propane suppliers choose not to publicly post their propane prices, and most government propane price surveys are only available between October and March of each year, propane consumers have limited options to compare their suppliers propane prices.
Ace Propane, which posts its prices on its website, is showing residential propane at $1.79 per gallon. Although other propane providers chose not to disclose their exact prices for this story, Marcione doesn't anticipate to see anything above $2.20 per gallon this year.
"I don't feel like it will jump up like the gasoline prices do," Marcione said. "But it's such a volatile market; you never know."
According to the annual Winter Fuels Outlook from the Energy Department's Energy Information Administration, prices will rise slightly as a colder winter than 2011's will drive up demand.
Heating bills will rise an estimated 20 percent for heating oil customers, 15 percent for natural gas customers, 13 percent for propane customers and 5 percent for electricity customers, the EIA announced Wednesday.
Heating oil customers are expected to pay an average of $3.80 per gallon, the highest price ever. That would result in record heating bills, at an average of $2,494. That's nearly $200 more than the previous high, set in the winter of 2010-2011.
Customers who use natural gas, electricity or propane should see lower bills than in a typical winter because of relatively low prices. For example, natural gas should average $10.32 per thousand cubic feet. That's 0.8 percent higher than last year but 13 percent lower than the five-year average.
"It's two different worlds. For most families this is still going to be an affordable year, except for those who use oil heat," says Mark Wolfe, the Executive Director of the National Energy Assistance Director's Association. "For them, it's going to be very difficult."
Electricity prices will fall 2.3 percent to 11.4 cents per kilowatt hour, the government estimates. Propane prices will fall 8 percent in the Midwest to $2.02 per gallon and 13 percent in the Northeast to $2.95 per gallon.
Natural gas, propane and electricity prices are relatively low because of a dramatic increase in domestic natural gas production over the last five years. Natural gas is used to generate about one-third of the nation's electricity and is instrumental in setting the price of electricity. Recently drillers have been increasing production of so-called natural gas liquids, including propane.
Heating oil will hit record prices because it is made from crude oil. Crude is priced globally, and has stayed high because of increasing world demand, worries about supply disruptions in the Middle East, and stimulus programs from central banks around the world that encourage investment in oil and other commodities.
Oil has averaged $95.95 per barrel in the U.S. so far this year, up from an average of $94.86 in 2011.
Nationwide, residential propane prices are averaging higher than in Nevada County. According to the U.S. Energy Information Administration Oct. 8 report's, the national average for residential propane is $2.38 per gallon, down slightly from $2.78 in October 2011.
Early winter and spring prices this year were much higher than they are now, which Marcione said could have been worse if the Hurricane Season had been more ferocious.
In February, some Nevada County residents in outlying areas reported paying more $3 per gallon.
Part of the cost to deliver to outlying areas is due to transportation, according to the EIA. Customers farthest from the major supply sources in the Gulf Coast and the Midwest will generally pay higher prices for propane.
In Nevada County, that practice holds true. But if neighbors band together or live in a residential community, such as Lake of Pines, Lake Wildwood or Alta Sierra, it is possible to negotiate a lower group rate.
"If it lowers our overhead by allowing us to get in and get out, we try to pass that along to the consumer," said Doug Robertson, owner Ace Propane, in May interview with The Union.
The time of year also matters when it comes to propane rates. Residential propane use peaks from October through March of each year, according to the EIA, which doesn't even collect data in the summer. As demand increases, so do prices.
Owning the propane tank, rather than leasing from the provider, can also lower the per gallon rate.
According to http://www.checkpropaneprices.com, which tracks propane prices nationwide, the average cost of propane to a homeowner who owns their own take in Nevada County was $1.30 per gallon.
The Associated Press's Jonathan Fahey and Michael Hill contributed to this reporter.
To contact Staff Writer Christopher Rosacker, email email@example.com or call (530) 477-4236.
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