Shortages, transportation problems, sales to foreign countries and commodity speculation are being blamed for the sudden and dramatic increase in propane gas costs hitting the Colorado Springs area and other parts of the country.
The co-owner of Old Town Propane Company in Colorado Springs said Friday that the wholesale costs for the fuel she delivers to customers increased by about $2.50 in roughly the past three weeks. Linda Schlarb said it is "standard" for propane prices to increase during the winter, but price fluctuations are "usually a couple cents." This winter, it's different.
"The price has gone crazy," she said.
While the increase in propane costs is squeezing Schlarb's customers, the wholesale price is affecting her operating costs.
"My price has gone up so much that I am wondering how I am going to be able to pay for the next shipment," she said.
Propane gas, like most other commodities, is traded on the Chicago Mercantile Exchange. Propane gas settled at $1.68 on Friday, up 34 percent from $1.25 on Jan. 2, according to a Charles Schwab representative. That translates into a 50 percent increase in the cost of propane to consumers after transportation, administrative and wholesaler costs are included. The average national cost for residential propane was $2.76 a gallon Dec. 23, according to the U.S. Energy Information Administration website. By Jan. 27, it was $4.14 per gallon.
Schlarb blames part of the increase on the availability of supplies. The amount of propane produced and stored for one winter is based on how much propane was used the previous winter, she said. But propane supplies have seen a double whammy this year, starting with excessively wet grain harvests. Farmers use propane to drive pumps that irrigate fields and other machines. But they also use the heat from propane to dry wet wheat and other grains before storage.
The large, wet harvests caused farmers to use more propane than in the past, starting the early depletion of propane supplies, Schlarb said.
That, combined with bitterly cold temperatures across the U.S. the past three weeks, has caused propane supplies to dwindle to dramatically low levels, said Kristin Westman, associate manager at Apollo Propane Inc. in Falcon.
Westman said her company has not experienced any problems in getting propane for customers.
"But we are already seeing and hearing about shortages in some parts of the country," she said.
Westman said her average customer uses 100 to 150 gallons of propane per month during winter. That means customers are paying $621 for 150 gallons of propane based on the Jan 27 price of $4.14 per gallon.
Contact Ned Hunter: 636-0275