Propane Now Pushing $5/gal?

[Circle B MN]

The word I heard today was that the local price had dropped from over $5 back down to $3.80 still spendy, but headed in the right direction.

 

[Wood Doctor]

Hey Edwin, I'll trade you some dry silver maple and pine for some propane? I have about 200 gals left hoping this last till the prices come down.

Brian

Dry cottonwood looks really good right now. Maybe the Indians were right using eastern cottonwood to heat their wigwams. They couldn't afford to buy propane at these prices. Today, I can't either.

Propane prices usually hide just above natural gas, but that luxury may be over. What really amazes me about all of this is that nobody predicted last fall that the rattlesnake was getting ready to bite.

 

[memory]

Besides the farmers using more propane than usual, I heard somewhere that we sold some to China as well.

I sure am glad we don't use propane to heat with. Couldn't afford it years ago and really can't afford it now.

 

[Wood Doctor]

Besides the farmers using more propane than usual, I heard somewhere that we sold some to China as well.

I sure am glad we don't use propane to heat with. Couldn't afford it years ago and really can't afford it now.

We are still selling propane to China because those contracts are in place. The local supply situation does not invalidate those contracts. Every day I watch BNSF trains with rail cars full of propane heading south. Empty ones head north to be refilled again.

 

[Dalmatian90]

Well, that's what it is here. The propane price more than doubled last week in Nebraska. I've heard prices as high as $5.50 a gallon in Wisconsin and $5.25 a gallon in Illinois. Rationing is in full force.

That's the marketplace at work. It will cycle again.

Wrong Answer.

You can have a free market where prices rise to reduce demand.

Or you can you rationing.

You can't have both and call it a free market -- what we have here is market manipulation going on somewhere.

We've seen this repeatedly over the last 15 years in the U.S. with manipulation of energy supplies and/or cornering futures markets, with a number of multi-hundred million dollars fines occasionally handed down to make it look like the Feds are enforcing laws without actually discouraging the fraudsters...anyone who thinks this is free market at work is fooling themself.

 

[cheeves]

See where that gas line in Canada blew up!?

 

[Cerran]

This price for propane is really absurd. That equates to 18,000 BTU per dollar spent. You can buy nearly 40,000 BTU per dollar by buying gasoline or #2 oil instead. But, get this: I sell firewood for $200 per cord and that buys at least 20 million BTU of heat. So, my firewood delivers 100,000 BTU per dollar spent. That means that propane is now selling for about 5 times the price of firewood.

Please correct me if I am wrong and comment as you see fit.

$66 per million BTU at that price. ~3x the cost of oil

 

[Cerran]

Wrong Answer.

You can have a free market where prices rise to reduce demand.

Or you can you rationing.

You can't have both and call it a free market -- what we have here is market manipulation going on somewhere.

We've seen this repeatedly over the last 15 years in the U.S. with manipulation of energy supplies and/or cornering futures markets, with a number of multi-hundred million dollars fines occasionally handed down to make it look like the Feds are enforcing laws without actually discouraging the fraudsters...anyone who thinks this is free market at work is fooling themself.

Actually it's doubtful there is manipulation at work given the colder than normal weather for the midwest and south this year. The short rise and fall is indicative of a shortage which the market seems to be handling. The high prices are a signal for more propane to come to the region.

 

[Jon B.]

The "rationing" is being done at the retail level so that there's enough supply to sell to those who really need it. Around here, dealers are/were limiting customers (not commercial operations, I think) to 200 gallons. This is not like the 70s when the government decided when, who and where. This IS the free market.

Stop seeing conspiracies where none exist.

Jon

 

[Chris-PA]

It's not a conspiracy and the weather and cold temperatures are not really that unusual historically. Yet supplies are short and prices are high. Strange given that we have so much oil that we'll soon be energy independent.

 

[Woody912]

It's not a conspiracy and the weather and cold temperatures are not really that unusual historically. Yet supplies are short and prices are high. Strange given that we have so much oil that we'll soon be energy independent.

Actually I don't think the overall supply is short, distribution is the bottleneck. There is one pipeline going thru southern Indiana from TX and another thru Iowa and that appears to be it. Local prices in TX and in PA where they have had a lot of controversy about fracking in the Marcellus basin are in the $2.50 range according to one source. That record corn crop burned a lot of gas. Also notice gasoline prices are down, propane can by a byproduct of refining so are we getting cheaper gas because they are pushing production to make propane?

 

[dave_dj1]

My daughter told me this was going to happen a few weeks back, she works at one of the largest propane company's in the area. She said that one pipeline is down to transport butane instead of propane and that was causing the "shortages".
I'm so very glad I don't have any propane on my property except for a couple of 20 pounders for cooking steakes! By the way, I was told today at the market where I buy my steaks that beef was going to go up yet again! Now we will all freeze and starve, hopefully the cold takes me before the hunger, I like to eat!
dave

 

[hamish]

In three months we wont need any for heating..........just for grilling!

 

[lapeer20m]

One thing your btu equation did not factor in is the efficiency rating of the appliances. An LPG furnace can be 95% efficient while a Woodstove may only be 50% efficient so you may need twice as many wood btu 's to produce the same amount of usable heat.

Also moisture content of the wood is a factor....

But at 4x the price wood sounds like a better deal than propane!

 

[zogger]

Dry cottonwood looks really good right now. Maybe the Indians were right using eastern cottonwood to heat their wigwams. They couldn't afford to buy propane at these prices. Today, I can't either.

Propane prices usually hide just above natural gas, but that luxury may be over. What really amazes me about all of this is that nobody predicted last fall that the rattlesnake was getting ready to bite.

OK, I will make a prediction. All the frack baby frack stuff has been a rather large shill and pump and dump. I don't think you will be seeing near as much "cheap energy" out of these endeavors as they were first going on about.

 

[Wood Doctor]

One thing your btu equation did not factor in is the efficiency rating of the appliances. An LPG furnace can be 95% efficient while a Woodstove may only be 50% efficient so you may need twice as many wood btu 's to produce the same amount of usable heat. Also moisture content of the wood is a factor....

But at 4x the price, wood sounds like a better deal than propane!

The price jumped up so fast that efficiency really meant very little, especially with many wood stoves today generating 80% efficiency. Not to mention that propane rationing was imposed at many exurban and rural locations. When was firewood ever rationed? Suddenly, it's a bargain to buy propane at $3.50 a gallon because it dropped back to under $5/gal or even $6.50/gal as it reached in central Wisconsin?

Baloney! Firewood remains less than half the price of propane and so is #2 fuel oil.

 

[johnnylabguy]

The price jumped up so fast that efficiency really meant very little, especially with many wood stoves today generating 80% efficiency. Not to mention that propane rationing was imposed at many exurban and rural locations. When was firewood ever rationed? Suddenly, it's a bargain to buy propane at $3.50 a gallon because it dropped back to under $5/gal or even $6.50/gal as it reached in central Wisconsin?

Baloney! Firewood remains less than half the price of propane and so is #2 fuel oil.

For what its worth I just spent 3.58/gal for fuel oil last Friday here in central Ohio. I don't even know if that's a good price because its the first time I've bought any in over 3 years. Has anyone ever said here they love wood heat?

 

[Wood Doctor]

For what its worth I just spent 3.58/gal for fuel oil last Friday here in central Ohio. I don't even know if that's a good price because its the first time I've bought any in over 3 years. Has anyone ever said here they love wood heat?

$3.58/gal fuel oil equates to $2.30/gal propane. I think you now know why paying $5/gal or more for propane has a few people rather upset. You could pay $7.80/gal for #2 fuel oil and break even with $5/gal propane.

 

[Cerran]

One thing your btu equation did not factor in is the efficiency rating of the appliances. An LPG furnace can be 95% efficient while a Woodstove may only be 50% efficient so you may need twice as many wood btu 's to produce the same amount of usable heat.

Also moisture content of the wood is a factor....

But at 4x the price wood sounds like a better deal than propane!

Depends on how the heat is used too. Most modern wood stoves are in the mid to low 70's in actual efficiency but being in a room they can make things feel a lot warmer because of the radiant instead of convective heat.

 

[Dalmatian90]

http://www.eia.gov/petroleum/heatingoilpropane/

Actually it's doubtful there is manipulation at work given the colder than normal weather for the midwest and south this year. The short rise and fall is indicative of a shortage which the market seems to be handling. The high prices are a signal for more propane to come to the region.

And I have a bridge in Brooklyn to sell you if you believe that.

Propane in the U.S. is about 50% from distilling petroleum and 50% from processing natural gas.

As we use most propane in the fall for drying crops, then especially over the winter for heating...but the refineries are producing at about the same rate year round, we end up with two extremely large storage facilities in the U.S. Conway, KS and Mont Belvieu, TX EACH have 30% of the capacity to store propane in the U.S. -- add up everything from refineries to the tank in your backyard, those two spots hold 60% of capacity.

Doesn't matter what "signal" you want to send for more propane, it's going to come to you by pipeline from Conway or Mont Belvieu because that's where the propane is.

Raising the wholesale, Midwest price of Propane from $2.151 to $3.987 in a week ( http://www.eia.gov/dnav/pet/pet_pri_wfr_dcus_R20_w.htm ) isn't a signal to send more propane. You, if someone isn't deliberately choking off the supply, aren't going to push anymore propane through the pipes no matter what the price.

We saw both actual choking off of supply points (by strategically timing "maintenance") and manipulating financial markets (selling power out of state, then buying it back at higher rates) with Enron in California's electric market. http://www.nytimes.com/2002/05/07/business/enron-forced-up-california-prices-documents-show.html

A decade after Enron, we saw J.P. Morgan Chase pull the exact same crap with electric markets -- http://www.motherjones.com/mojo/2013/07/jpmorgan-chase-manipulate-electricity-price-settlement-ferc

Oh, that's electricity not propane you say?

10 years ago,

The Order finds that in February 2004, BP employees sought to, and did, corner the TET propane market for the purpose of dictating prices to other market participants in order to obtain a significant trading profit.

http://www.cftc.gov/PressRoom/PressReleases/pr5405-07

Functioning market my white ass, it's a criminal enterprise going on here and anyone who claims otherwise needs to pull their head out of the sand.