Propane costs follow lead of pricey natural gas : LUSENET : Grassroots Information Coordination Center (GICC) : One Thread


Propane costs follow lead of pricey natural gas Post staff reportr

In recent years, propane sold for under $1 a gallon and was considered the most economical fuel next to natural gas for heating homes.

Now, not only has the price of natural gas skyrocketed, propane has followed suit.

''It shocked the heck out of me when I saw the price of my most recent delivery,'' said Jerry Rasnick of Crosby Township, who paid $2.50 a gallon.

Propane is mainly used by people in rural or suburban areas without natural gas.

Cinergy officials say 3.1 percent of people in Greater Cincinnati use propane to heat their homes, compared with 63.4 percent using natural gas, 26.8 percent using electricity, 5.7 percent using oil, 0.5 percent using wood and 0.5 percent using other fuel.

Sandy Stehlin of Green Township said she knew enough not to be surprised when her latest propane delivery was $1.80 a gallon.

''I didn't figure it would be any different than any other fuel,'' she said. ''It's all more expensive.''

Experts say propane costs more mainly because it is produced from either natural gas or crude oil, both of which have leaped in price.

''During the 1990s our base price was around 99 cents a gallon and in 1999 it dropped down to 89 cents,'' recalls Tom Kuhn of Kuhn Propane in Hamilton.

''Then about a year and a half ago it broke loose. It's now as high as $2.80 a gallon some places.''

There already have been complaints of excessive prices.

Officials in Ohio, Kentucky, Michigan and New York have threatened to sue an Ohio-based company, Level Propane Gases Inc., for over-charging customers.

Michigan Attorney General Jennifer Granholm said her office has received nearly 350 complaints from Level Propane customers since December about being charged more to refill their propane tanks than the amount they agreed to in their contracts.

Company officials say they are working to resolve the complaints.

Doug Auxier of Auxier Gas in Batavia doesn't look for prices to go much higher this winter.

''But after next Dec. 1, it's a wide open affair,'' he said.

''It depends on a lot of things, like how hot the summer is, how much natural gas and electricity is needed and how cold next November is.

''And, it depends a lot on what the oil people call 'the fundamentals.'''

The ''fundamentals,'' Auxier says, involve things like the availability and price of various fuels that big refiners use to ''cook natural gas to produce propane.''

''They usually use natural gas to cook other natural gas to get propane, but with the price of natural gas as high as it's been, it's become more economical to use propane itself to cook natural gas to produce propane.

''That cuts down on the propane supply and increases the price.''

Kuhn says wholesale propane costs are much more volatile than a few years ago.

''Propane prices used to change by one-tenth of a cent or one-quarter of a cent per gallon,'' he said.

''Now, propane can go up as much as six cents a gallon in one day.''

Publication date: 01-26-01

-- Martin Thompson (, January 27, 2001

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