Propane users in the Midwest are getting hit with a double-whammy this winter, as they face near record-high prices along with record low temperatures.
Increased demand for propane because of the colder than usual winter has left inventories below normal levels and pipelines constrained by service changes, according to Bloomberg.
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For instance, propane in Conway, Kan., ranges from $2.87 to $3.57 a gallon, 96.62 cents more than it costs in Mont Belvieu, Texas. This has been the largest difference since at least 2001. Propane at Conway sold at an average difference of 2.8 cents from Mont Belvieu last year.
"We are trying to find incremental supply and we are almost at rock bottom for inventories at Conway," Peter Fasullo, of EnVantage Inc., a Houston energy consultant, told Bloomberg. "Conway is basically saying bring every barrel up there, we will pay a premium for it."
Midwest propane stockpiles are the lowest for the winter since the government began keeping record in 1993, where it is used to heat homes more than anywhere else in the U.S.
"Last week, the U.S. Department of Energy reported that cold weather led to record-high natural gas storage withdrawals, as well as propane," the National Propane Gas Association said in a statement released Thursday.
"These are the largest drawdowns in the 20-year history of the survey and the second time this year the record has been broken.
"Efforts are underway with the U.S. Department of Energy to acknowledge that emergency conditions could be forming, as consumers and businesses in dozens of state are faced with higher electricity and gas costs due to persistent cold weather," the statement continued.
Jeff Petrash, the general counsel for the NPGA, told the New York Times
said there is "plenty of supply of propane," but distributors are struggling to get the fuel where it is needed the most.
Petrash said that domestic propane production increased to an estimated 17.8 billion gallons in 2013, from 15.2 billion gallons in 2008. The propane export market, though, went from 800 million gallons in 2008 to 4.3 billion gallons last year, offsetting the increase.
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