Cold winter fires up fuel prices


Rising cost of energy

Propane and natural gas prices have risen sharply as cold weather this month has driven up demand and exacerbated the effect of earlier pipeline bottlenecks and low inventories. This chart shows benchmark wholesale prices at the end of the month* for the two fuels.

Month, Natural gas ($ per million BTUs), Propane ($/gallon)

Jan. 2014, $4.78, $1.69

Dec. 2013, $4.34, $1.26

Nov. 2013, $3.79, $1.16

Oct. 2013, $3.57, $1.17

Sept. 2013, $3.49, $1.07

Aug. 2013, $3.57, $1.18

July 2013, $3.46, $0.94

June 2013, $3.57, $0.85

May 2013, $4.02, $0.90

April 2013, $4.30, $0.94

March 2013, $4.03, $0.95

Feb. 2013, $3.48, $0.86

Jan. 2013, $3.33, $0.86

* Latest prices are as of Friday for natural gas and Thursday for propane

Source: Bloomberg

Barbara Savage was quoted a price of $250 when she called recently about having the propane tank re-filled at her rural home outside Athens. By the time she had the delivery made a week later, the bill had climbed to $431.

The 76-year-old retiree, who uses propane for heat and cooking, felt she had no choice but to pay it.

“There’s more cold weather coming,” Savage said. “I’ve got to stay warm.”

Even when not snarling traffic or forcing school or business shutdowns, this year’s cold winter is playing havoc with household budgets through surging usage and prices for heating fuels — whether propane or the more commonly used natural gas.

While prices often shoot up at this time of year as demand spikes, colder weather and other factors have disrupted prices and supplies more than usual this year.

Worst hit has been propane, known best to city-dwellers as fuel for the gas grill but primary heating fuel for many rural homeowners. Propane shortages and high prices also hit industrial customers such as poultry farmers and factories and warehouses that use fleets of propane-fueled forklifts.

Governors in Georgia, Alabama and several other states have issued emergency orders aimed at preventing price gouging by propane distributors and making it easier to truck propane to their states. In Georgia the Governor’s Office of Consumer Protection said it will investigate complaints of higher propane prices that don’t seem justified, and could fine distributors.

Meanwhile, use of natural gas is up sharply as well, which means most households face higher bills based on consumption alone. Wholesale natural gas prices have jumped about 40 percent from a year ago, after years of relatively low prices stemming in part from the production boom in the United States.

Customers of SCANA, which has about 460,000 natural gas accounts in Georgia, have used about 70 percent more gas this month than they did last January, spokeswoman Simone McKinney said. Natural gas is “readily available,” she said, but wholesale prices were up 27 percent in January.

That could affect retail rates when next set. The effect on individual customers will depend on whether they have longer-term fixed rate contracts — and when those come up for renewal — or if they are on more volatile variable rate plans.

The propane shortage and recent price spikes stem from other factors than just winter weather. Propane inventories were already low because farmers in the Midwest had used a lot of the fuel to dry corn that was harvested during an unusually wet fall. Pipeline disruptions and increased propane exports also factored in.

Propane suppliers in Georgia and across the nation have been rationing some customers and looking for fuel from other regions.

“I’ve never seen it like this,” said Lynda Humm, vice president of Georgia Gas Distributors, which rationed propane deliveries to some of its industrial customers last week until it could arrange to get emergency propane shipments by truck from Texas. “We just found out [last week] we were in a pickle.”

The Atlanta company, which has 1,800 industrial, residential and agricultural customers, normally gets propane from a pipeline terminal in Milner, Ga. But the pipeline company said it could only supply about 60 percent of what Georgia Gas wanted, Humm said.

The wholesale prices Georgia Gas paid at the Georgia terminal also shot up 86 percent in a week as propane supplies ran low, she said. Harder-hit was the Midwest, where the wholesale price of propane tripled to $4.95 a gallon last week before falling to $2.80 this week.

To get around the shortage here, Georgia Gas contracted with two long-haul truckers to pick up emergency loads last Monday in Texas and make the 14-hour drive to Georgia. They made it to Atlanta before the winter storm hit, but the company had to shut down deliveries until Thursday because of the gridlock here, said Humm.

Georgia Gas has ordered six more truckloads from Texas for February, she said.

“Now that we have the loads from Texas, we don’t think the rationing will continue,” said Humm.

Jim Holt, a chicken grower in Cassville, said he was relieved when Georgia Gas told him it had found a way to get more propane.

He was due to receive about 100,000 day-old chicks soon, and each of his three 500-foot-long chicken houses needs to be heated to 90 degrees to keep them healthy. In cold weather each house can use 1,000 gallons of propane in a week.

“If you can’t get propane, those chicks are going to die,” Holt said. “It was serious.”