Why are Propane Prices so High in CT?
Ask anyone who has gotten a propane delivery and they will tell you that prices have gone up this season. The question, though, is why? It turns out it’s been a bit of a “perfect storm” all related to supply and demand, and the price of propane in CT saw a jump of more than $1.00/gallon almost overnight.
An AP Article that appeared in the CT Post on January 29th stated: “The national average price for a gallon of propane spiked this week to a little over $4, up from $2.96 from the previous week, according to the U.S. Energy Information Association. About 5.5 million homes are heated with propane, mostly in rural areas.”
DEMAND for propane has hit some record high levels.
- CORN When we tell customers that it all started with the corn crop in the Midwest, they don’t understand what that has to do with them. Extra demand strains supply. A rainy season led to a bumper crop of corn in the Midwest. Because much of that corn was harvested wet, it had to be dried to avoid spoilage. Propane is the fuel of choice to run the heating units that dry the corn. This spiked demand way beyond the forecast amount.
- POLAR VORTEX Whether you like the word or not, it’s been used to describe the severe extended cold weather we are experiencing. Prolonged cold has increased demand as well with homeowners turning up their heat more than usual.
SUPPLY is strained due to a combination of factors creating the “perfect storm.”
- INCREASED DEMAND has led to increased transportation costs. Moving more propane, quite simply, costs more.
- SEVERE WEATHER has made it more difficult to move the propane.
- CLOSED PIPELINE The Cochin pipeline, which historically has transported 40,000 – 70,000 barrels of propane a day, has been shut down. Replacing that infrastructure with other means has been slow and costly, creating an additional spike in the price of propane
- EXPORTING of propane has drained our supply even further.
When prices rise we all pay for it, unfortunately. People sometime feel like it is us taking advantage of our customers. Higher prices put increased strain on us as well. When prices double, our operating expenses double as well. When you are paying more, so are we. We are not making more, in fact, more often than not, it’s just the opposite. We are making less.
It is our hopes, as well as yours, that the prices come down quickly, as supply and demand once again level out. Until then, the best we can do is communicate and work together to weather this “perfect storm.” Trust that when you work with Wilcox Energy, you are working with a company established in the local shoreline community for nearly 60 years, a company you can trust. Call our office if you have any questions or concerns. 860-399-6218 or email us [email protected]