Price of Propane rises. Production decline?greenspun.com : LUSENET : TimeBomb 2000 (Y2000) : One Thread
Cost of propane up sharply
Source: Chicago Sun-Times
The price of propane has leapt since December, putting a squeeze on rural residents who use it for heat and on industries that need it for fuel or to make plastic.
The wholesale price of a gallon of propane has risen from 45 cents at the start of the year to 70 cents now. Propane futures have risen sharply in recent weeks.
Industry experts say several factors - demand in Asia, the rising price of crude oil, a cutback in production in Saudi Arabia and Mexico - are conspiring to make propane more expensive.
"Propane prices have been stronger than last year because of stronger crude prices," said Peter Ottman, editor of BPN's Weekly Propane Newsletter, a trade publication.
Petroleum has climbed from a little more than $10 a barrel to nearly $30. Propane is refined from petroleum or from fluids extracted from natural gas.
Other factors are at work as well.
"There has been very strong demand in Asia," said Daniel Myers, general manager of the Lisle-based National Propane Gas Association. Propane is used to make plastics, and the revival of Asia's economy has increased demand.
"Traditionally we have imported between 20,000 and 30,000 barrels a day but last year we imported only 5,000 barrels," Myers said. "A lot was going off to Japan and China."
Although propane is a gas, it typically is compressed into a liquid for sale and so is measured in gallons and barrels.
Myers said major producers of propane like Venezuela, Mexico and Saudi Arabia have cut back output, and that contributed to higher prices.
The current cold weather will increase consumption, industry analysts said, particularly on the East Coast where a blizzard is keeping rural residents in their homes.
David Milton, general manager of Mid America Propane, a distributor in Schiller Park, said his customers are suffering from sticker shock. "The consumer that was paying 65 cents a gallon in February is paying close to a buck now," he said.
Chicago residents may be most familiar with propane from buying a canister at a hardware store to fuel their gas grill. But propane is the fuel of choice for forklifts because it emits relatively little pollution compared with gasoline.
Other companies use it as a temporary heating source, for example to warm a shed only when it is in use.
"Industrial users have been reasonably receptive to price increases because they have seen what happened with diesel and crude," Milton said.
Publication date: Jan 27, 2000. From: cnnfn, energy section.
-- Y2kObserver (Y2kObserver@nowhere.com), January 30, 2000
* * * 20000130 Sunday
Hmmm ... Isn't propane sold by weight (i.e., USA - Pounds) rather than fluid measure? When I take my propane tank in for refills, they set it on a scale and fill it until it tips the scale at about 20 pounds.
No big deal ... just curious.
Regards, Bob Mangus
* * *
-- Robert Mangus (email@example.com), January 30, 2000.
By weight, I agree.
-- snikpoh (firstname.lastname@example.org), January 30, 2000.
a gallon of propane weighs about 4.3 pounds. one hundred pound tank has about 23 gallons when full. 20 pound bar-b-q tank holds about 4.5 gallons. was .94 cents per gallon last fall...is now 1.90 per gallon here in central sc. some suppliers are temp out.
-- don (email@example.com), January 30, 2000.
Here in northern Michigan I had propane tank filled 1/28/00. $1.09 per GALLON on the receipt. When filling my barbeque tank, they measure it in pounds when billing.
-- JB (firstname.lastname@example.org), January 30, 2000.
don is right about the conversion factors. It's simply easier (cheaper)for most dealers to measure the weight of the propane that they are putting into the tank. Rather than buying flow meters, they only have to buy a scale.
-- rocky (email@example.com), January 30, 2000.
Another reason for the 'weight' vs 'gallons' is that to fill a non- empty tank, gallons cannot be used because you can't tell how much is already in the tank. Weight gives a measure that will keep the tank from being overfilled.
-- BH (firstname.lastname@example.org), January 30, 2000.
Here in the Idaho Panhandle I saw the price of propane jump from $.99 to $1.29 in early January. Caught my attention because I use it to heat my garage every night during this time of the year. My dealer uses a flow meter which measures gallons.
The price of other fuels in this area (Coeur d' Alene), regular unleaded, diesel, have remained fairly steady at around $1.35 for both since the roll over but I have noticed some upward pressure on diesel in the last 10 days.
-- Bob Benson (email@example.com), January 30, 2000.
Unless the cost is rising due to oil price increases, there should be no other reason for propane to increase dramatically. Propane is a byproduct of natural gas, not oil.
If there's one thing this country has plenty of, it's natural gas. We aren't reliant or dependent on foreign sources for propane. Of course, there could be some price gouging going on just because it can be cloaked by the rising oil prices.
-- Vic (firstname.lastname@example.org), January 30, 2000.
When I had my propane powered freezer and refer installed lasted November, the propane distributor said that high oversea demand had pushed prices up. He installed a "big boy" type tank because of the low consumption rate of my appliances. "They just are pilot lights", he stated, and they have a pricing policy of charging a minimum 150% markup per year of capacity. So if a 500 gallon tank was installed, you would be charged at least for 750 gallons per year, even if you didn't use that much. He gave me a break by installing the 120 gallon tank (actually contains about 100 usable gallons since space is needed to boil off the liquid into a gas) and charging a one dollar annual rental for the tank so I wouldn't be subject to this minimum charge, since we didn't know how much propane these appliances would use. By the way, the Servel and Frostex have worked perfectly, and actually are better than their electric powered cousins because of their constant cooling, rather than the on/off cycles of electrics. They are built like tanks, and should last for many decades because they have no moving parts to wear out. The only disadvatage is the purchase price, especially considering the storage volume to cost ratio. I paid $1.00 per gallon, and shudder to think what the next fillup will cost. At my favorite truck stop on Hiway 94 in Kenosha Wisconsin, the price of diesel was the highest yet, at $1.49 9/10's. It cost $36 bucks to fill up the dual tanks and that's when it really hit me: if the oil of oil continues to rise, I would have to seriously think about curtailing any unnecessary driving. While I was pumping the diesel, I heard about the railroad layoff's and the high price of diesel being given as a partial explanation. In the short run, companies and individuals are in the same boat: your vehicles use fuel at a given rate, and can not be modified to be more economical, you need to purchase more efficient machinery. This isn't a quick or cheap option for most, so in the short run all you can do is cut back. That's why higher oil prices are so deflationary, and will cause a recession at the least.
-- Sure M. Hopeful (Hopeful@future.com), January 30, 2000.
Propane weighs 4.24 lbs/gallon, each gallon has 96,000 BTU Tanks are typically filled 80-85% of capacity to allow for expansion in summer, or a little more in winter in cold climates (as much as 90%). As one poster stated, room is needed to allow for it to boil off. It boils at -40 F or so.
-- Doesn't matter (email@example.com), January 30, 2000.
We payed .68 a gallon two weeks ago in south central Kansas.
-- Will continue (firstname.lastname@example.org), January 30, 2000.