Propane Problems Intensify -- Don't Buy Any, But Don't Run Out Either

January 21, 2014 06:50 AM

Persistent cold weather has sapped propane supplies in areas where it is needed most, forcing Hours of Service Waivers in 23 states. The trouble started at harvest when a larger and wetter than expected crop ran through the dryer. That pressured propane supplies going into winter. Since then, temperatures have kept the heat on in the 14 million homes that use propane for winter heat. That has officials in a number of states recommending LP customers ration supplies, especially in Northern areas.Picture1

Meanwhile, natural gas futures have been forging higher since mid-November, with the March '14 opening today at $4.23 3/4 -- now up 21 cents at midday at $4.44 3/4.

Cold weather is not expected to loosen its grip much over the next week, and another blanket of snow is scheduled to arrive on Thursday for Northern areas of the Midwest and parts East. With declining propane stocks, high demand and high natural gas prices in the face of a Polar Vortex, prices are expected to climb even farther.

I do not advise filling LP at current prices, but I do STRONGLY advise you not run out. We expect a low in LP pricing to arrive sometime in July, which does us no good now. We will look for opportunities to fill portions along the way, but anything booked between now and July should be strictly for immediate needs.

Nothing is worse than running out of home heat fuel at two o'clock in the morning... most of us have to learn that one the hard way. But this is not the year to try and get a quickie fill-up. Protect yourself, your livestock and your family by watching your LP levels carefully. Temperatures have fallen dangerously low more than once this winter, and more of the same is in the forecast.

Let me drop in a plug for increasing your on-farm propane storage when you get the chance. Now is the wrong time to do that, but if demand for LP tanks is high in the spring, we want you positioned at the top of that delivery list when the ground thaws. Speak to your preferred LP supplier today about doubling your current storage capacity. LP moved slightly lower this week, falling 3 1/4 cents to $2.05.

For more, see last week's Petroleum Report: Propane's Predicament...

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