Posted on 01/28/2014 8:42:14 PM PST by topher
Midwest spot prices for propane are now $5
The reason is that there are not [adequate] storage facilities for Propane as there are huge underground facilities of Natural Gas.
We have over a trillion cubic feet of Natural Gas in Underground storage throughout the country.
I doubt that the largest distributor of Propane (AmeriGas) has much in the way of storage. They would have a fleet of trucks to deliver it...
2,423 BCF (Billion Cubic Feet) (current week 1/17/2014)
2,530 BCF (Last Week 1/10/2014)
3,021 BCF (Year Ago 1/17/2014)
2,792 BCF (5 year average for this week in January)
We have huge storage for NG (Natural Gas), hardly nothing for propane... This needs to be fixed.
Link for EIA Report:
Wall Street Journal has the current price (Wholesale) at Mount Belvieu is almost twice the price this time last year...
$1.50 per gallon (about) versus $0.84 per gallon last year...
The Midwest $5 per gallon price is a retail-delivery price.
UPDATE 2-U.S. Midwest spot propane prices surge to near $5 a gallon
It’s hitting local farmers and rural residents in Wisconsin very hard. Granted, when it’s a real -20 before wind chills, everyone is paying through the nose for heat.
In 1910, Dr. Walter Snelling, a chemist with the U.S. Bureau of Mines, discovered that propane was a component of liquefied gas. Soon afterward, he discovered a means to store and transport propane and butane. Snelling received a patent for LPG in 1913, which he then sold to Frank Phillips, founder of Phillips Petroleum Company.
$ 2.59 retail today in Kennewick, WA. ( 200 mi. SE of Seattle )
I’ve got a couple of BBQ Grill tanks that are full. I wonder how much I could get for them if hauled them up to Nebraska and sold them on the side of the road.
Hank Hill lives in Texas, that’s why.
I may have just joked my way into a new enterprise. Lots of people have small propane tanks but they don’t cook out in the winter. I actually do have two in storage. I could buy as many as I could get my hands on, hire a driver with a Haz Mat Endorsement (I used to have one) and haul the tanks up north and double my money.
I have full tanks and I get to keep the tank. At $5 a gallon I should be able to gross about $20 a tank. A hundred tanks and I’m in business.
Propane in Pembine Wisconsin: $7.00
The underlying theme in all of this currently is: "Love of money is the root of evil."
Dare I say.. we know where that leads to.
This is sick...people’s lives are at risk in this cold. Gouging on prices no doubt!
Central Indiana propane
August ‘13 - $1.99
January ‘14. - $5.99
Just like the price of plywood before a hurricane, the laws of supply and demand and of economics are working perfectly. My heating oil bills, both per gallon and total, go up during the winter and down when warmer returns. Liberals call it price gouging and cite it as evidence of the failure of capitalism. Rational people know better-—it’s the laws of economics operating as immutably as those physical laws which govern the tides and the planets.
The Midwest does not have HARDLY ANY storage for PROPANE.
Hence, huge differences in price between where PROPANE is made versus the price in parts of the MIDWEST AND NORTHEAST.
Trucks are still needed for distribution. But there must be storage for propane in places like South Dakota, Minnesota, Wisconsin, Illinois, Indiana, Ohio, and Michigan.
There are pipelines for it (from Conway, Kansas), but there are problems with the pipeline (which may be weather related).
If there would be storage for propane, the supply-and-demand price problems would not exist.
http://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=PET&s=WPRSTUS1&f=W
It is a localized problem of too many things gone wrong at the same time in the same area.
http://www.eia.gov/todayinenergy/detail.cfm?id=14711
In the Midwest, propane is used for both drying agricultural crops and heating homes and businesses. For corn to be stored, it first needs to be dried, using large-scale heaters that often use propane for fuel. A late-2013 corn harvest, along with cold, wet weather, resulted in strong demand for propane at distribution terminals in the Upper Midwest. For the week ending November 1, 2013, Midwest propane inventories dropped more than 2 million barrels, the largest single-week stock draw in any November since 1993. This demand prompted a strong upward price response, and propane at Conway moved to a 3-cent-per-gallon (gal) premium over Mont Belvieu during the first week of November, the first such premium in almost three years.
After the harvest, logistical problems prevented the region from fully replenishing inventories before the onset of winter. The Upper Midwest is supplied with propane by pipelines (Mid-American and ONEOK) flowing north from Conway (home to 30% of the nation's propane storage), the Cochin Pipeline coming south from Canada, and from rail deliveries. The Cochin Pipeline, which delivers ethane and propane from Canada to the Upper Midwest, was out of service for maintenance from late November to December 20 and unavailable to deliver supplies. Rail transportation disruptions, both due to weather and other factors, curtailed deliveries from Mont Belvieu and Conway, as well as from Canada.
The most recent cold weather increased space-heating demand at a time when markets were already tight. As demand outpaced supply, inventories dropped further, by 1.5 million barrels and 1.2 million barrels for the weeks ending December 6 and January 3, respectively.
Not true. The Midwest has over 30 million barrels of storage.
http://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=PET&s=WPRSTP21&f=W
So, a typical propane truck carries 2500 gallons. 2000 mile trip to make $3 per gallon profit ($7500). Figure 10MPG at $3/gal for 3000 miles, or $900 in fuel cost.
Seems like every propane truck in the nation could profitably come to the rescue.
I got a call from a customer complaining that his house wouldn’t get above 50 degrees. It turns out he had been trying to save money on his propane bill by turning the furnace down to 45 during the day while he was at work. Our design temp is -12 degrees so when it doesn’t get much above-10 during the day and reaches -20 at night he can’t heat his home correctly.
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