While local farmers have certainly been impacted by spikes in propane prices, propane suppliers have been hit hard as well.
Retailers such as Rawhide Chemoil of Fremont have had to take a loss on some propane sales, as the retailers are honoring prices previously contracted with a customer. Prices of bulk propane have at times fluctuated so suddenly and so drastically this winter retailers cannot always get the quantity they need at a price that’s equal to the selling price.
Jennifer Weiss, president of Rawhide Chemoil, said prices peaked at $3.49 per gallon and 9/10 in late January, but had fallen to $2.55 by Feb. 18. She said a number of factors diminished the supply of propane, and the capability to get it to retailers.
“The Greenwood cavern was nearly empty, and a major supply line was down,” Weiss said. “Plus, we had a late drying season, and severe cold this winter.”
Weiss said retailers further north are experiencing even more cold, and tend to look toward the south when propane is low. Those orders put a strain on supplies in eastern Nebraska, she said.
Lynne Schuller, executive director of the Nebraska Propane Gas Association, said 8 to 10 percent of all rural Nebraska homes use propane. Prices were at all-time highs in January, and were sometimes changing even within a few hours, but have stabilized a bit.
“There definitely has been some pain regarding propane heating bills this winter,” Schuller said. “A mild cold snap cuts down supplies. A severe one, combined with other factors, diminishes supplies and drives up prices.”
Schuller said demand and prices for propane are low in the summer months. However, propane is used by farmers for drying crops in the fall, and a very wet September and October 2013 led to a frenetic, high-propane-use, crop-drying season.
Several consecutive days of subzero temperatures this winter hasn’t helped with heating demand, either.
“I’ve talked to retailers who would see the price per gallon, from their suppliers, go up between 8 a.m. and 10 a.m.,” Schuller said. “It’s an issue of supply and being able to move propane, rather than how much is produced. Consistently heavy cold in December and January is creating more demand for propane for heating.”
A Jan. 22 website release from the Propane Education and Research Council addresses some of the propane issues. Prices are driven by ability to move the gas, rather than how much is in circulation.
“The supply of propane is not a problem,” the release says. “The U.S. is producing more propane now than it has in decades. The real problem is getting propane from where it’s stored, to where it’s needed.”
The release also quotes a 2011 study that “estimated that there are about 3.9 million households that use propane as their primary heating fuel in the 30 states under an hours-of-service exemption.”
Weiss said Rawhide Chemoil will keep its word on quoted prices, especially if under contract. However, she said supplies must sometimes be rationed to make sure all homes have enough heat to get through the cold winter months. Some customers in Washington County and other rural areas can be served through partial deliveries.
“We reset prices when we get new product in,” Weiss said.
Schuller said she wants to dispel the myth that retailers are getting rich off of a propane shortage, especially small firms like Rawhide Chemoil. Retailers trying to set prices high enough to keep their reserves from being raided, yet are also trying to maintain relationships with long-term customers.
“Some of these folks have had their customers for 20 or 30 years,” Schuller said. “If they quote lower prices, they have to take some losses sometimes. They can’t just go back on their word. “