April 23, 2014

Low supplies, bitter cold drive propane prices to record levels

Tight supplies and greatly increased demand due to the cold weather have caused propane prices to spike throughout the Midwest.

Spot propane prices in the Midwest rose more than a dollar to a record $5 a gallon on Thursday, before settling down to $4.50 a gallon.

Propane prices for January delivery from the Conway, Kansas trading and storage hub jumped to $4.93, up from $3.39 the day before and more than double the price from last week.

Farm groups throughout the Midwest report farmers are struggling to get enough propane and, then, struggling to pay for what they get. Poultry producers have been hit hard. Some farmers report suppliers have refused to fulfill some contracts for propane signed before the jump in prices.

Suppliers say propane supplies were tight prior to the bitter cold snap that descended on the Midwest. The cold drove up propane use and drove down reserves.

The United States Energy Information Administration reports the average residential propane price in the Midwest hit $2.54 a gallon in the week prior to January 20th. It was $2.39 during the previous period, the highest since the administration began charting prices in late 1990.

The Thursday price at the Kansas hub was the highest since Reuters began keeping data on propane prices in April of 1989.