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Caveats with Winter Propane Pricing

As we mentioned in the past, there are a handful of caveats to predicting propane process in the short term.  To help gauge prices in the near term, during the winter months beginning in October, the U.S. Energy Information Administration (EIA) completes surveys of residential and wholesale energy prices around the country.  They collect data on both propane and heating oil through mid-March by calling individual heating fuel retailers.  On October 11, the EIA released the first results of their survey for this winter.

While the survey does help give some insight on propane prices, it is important to consider the survey’s limitations.  For one, both consumer and commercial propane pricing is determined based on individual’s annual consumption.  Higher or lower tiers of consumption could result in significantly different prices than the average.  Additionally, tank size, expected number of deliveries, and tank leasing costs also factor into individual pricing and again may vary greatly from an average price reported by the EIA.  However, the survey can be a useful starting point but it is critical to understand what completely goes into an individual’s pricing.

The most current survey was released on October 17th, with another update due today (October 24th) at 1 PM EST.  And in line with 2012-2013 winter spot pricing trends, both wholesale and residential propane prices are lower than last year (although commercial prices are not specifically surveyed by the EIA, they tend to follow the same upward or downward trends and usually are somewhere between wholesale and residential prices).  Wholesale prices are just over $0.50 per gallon less than this time last year while residential prices are down by more than $0.40 per gallon.  Customers should take advantage of these prices while they still can because they are likely to rise throughout the winter as temperatures drop.

October 17, 2012 EIA propane pricing survey results for Residential and Wholesale customers.

October 17, 2012 EIA propane pricing survey results for Residential and Wholesale customers.

 

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