by Mike Scott
NEMOnews Media Group
Although February’s cold weather is past, propane users across the area continue to feel its effects.
According to the U.S. Energy Information Administration website, retail propane prices in Missouri have jumped by more than 34 percent since the last week of January, from $1.807 per gallon to $2.429 per gallon on March 1.
What has caused the jump?
“The movement in propane prices is directly tied to the arctic blast that blanketed the majority of the country in snow and freezing temperatures. The storm and extreme cold caused heating demand to spike and prices to rise across the energy spectrum,” said Adam Buckallew, senior public and governmental relations specialist for MFA Oil Company.
“It was a very cold February for much of the nation, which created widespread need for electricity, natural gas, propane and heating oil. All energy types saw prices increase due to supply and demand.
This did not impact propane customers who had pre-buy or contracted gallons or those whose supply carried them through the month,” said Steve Ahrens, president/CEO, Missouri Propane Gas Association.
Propane is a by-product of natural gas processing and crude oil refining, with almost equal amounts of production derived from each of these sources, according to the U.S. Department of Energy.
In February, many of the largest refineries were shut down due to the arctic conditions in Texas and along the Gulf Coast, which cut electricity, water and fuel supplies.
Production fell to levels lower than those seen following Hurricanes Marco and Laura in 2020.
According to the EIA website, “By the peak of the weather’s impact Feb. 17, several refineries had announced either substantial or complete shutdowns as a result of external power outages, constrained natural gas supplies, logistical disruptions or damage to process units.
“In total, an estimated 3.7 million b/d, or 20 percent of total U.S. refining capacity, was shut in as a result of the weather.”
“Overall propane inventory in the United States and stocks in the Midwest region have been significantly drawn down,” Buckallew said. “The latest propane inventory report from the U.S. Energy Information Administration showed total propane inventory at 43.491 million barrels.
“Last year at this time, there were 68.132 million barrels – a difference of 24.641 million barrels. In the Midwest propane inventory is down to 9.759 million barrels compared to 13.266 million barrels at this time last year, a difference of 3.507 million barrels.
“The drop in supply coupled with the surge in demand has caused the wholesale price of propane to jump more than 50 percent since Jan. 25, 2021.”
The higher prices impact residential propane consumers, especially those on fixed incomes.
Edna Whitlock, emergency service coordinator for the Northeast Missouri Community Action Partnership, has seen the impact already. The agency serves Adair, Clark, Knox, Schuyler and Scotland counties.
“The price increase of propane has affected how much we can help clients,” Whitlock said. “I noticed an increase of 50-75 cents more per gallon, and limiting the minimal amount they can get at one time.
“People struggling before are now having to deal with the price increase and using the all the crisis funds. We can help with just about 1.5 refills instead of the normal 2.5 refills.
“Once people use the $800 crisis funds, we have no extra money to help them through the rest of winter,” Whitlock said. She is hoping the State of Missouri will provide more assistance.”
Buckallew added one piece of good news, however.
“We do expect prices to moderate once we get past the current demand spike and supply has an opportunity to be replenished,” he said.
And it’s almost spring.