Propane Prices Skyrocket As Temperatures, Inventories Fall

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The unusually cold winter so far this year has led to a shortage of propane for many areas of the Midwest with prices climbing and delivery bottlenecks results in slow deliveries.  The shortfall in fuel has left nearly everyone from rural residents to poultry and hog farmers looking for ways to stretch supplies and speed up trucks.  In fact, reports are now that governors and regulators in nearly 33 states  have relaxed transportations regulations to ensure that fuel moves as freely as possible as temperatures continue to fall.  The U.S. Department of Transportation has issued an hours of service waiver for February  as well, at least for the Midwest and Eastern U.S.
Forecasts don’t look to be cooperating either.  The National Weather Service forecast for the first week of February is calling for the Northeast and Upper Midwest to see temperatures 50%-60% below normal for an already cold time of year.  The Great Lakes area is expected to see temps 60%-70% below normal.  Unfortunately, these temperatures aren’t out of line with the polar vortex conditions that the U.S. has seen this winter.  The brutal cold has increased demand for propane to the point that the Energy Information Administration is reporting a 35% decrease in available propane supplies since the end of November, equivalent to 19 million barrels.  For the week ending January 17th alone, propane supplies dropped by 3.4 million barrels.
The draw on supplies has been reflected in price.  The major distribution point for the Midwest at Conway, Kansas saw prices hit $5.00 a gallon on Thursday before prices fell back by 95 cents on Friday in what was reported as light trade.  Buyers were also reported to be purchasing supplies from the other major hub at Mount Belvieu, Texas for $3/gallon and then paying a $1 per gallon in transport to bring it to Conway.  Even at the $4.00 close on Friday, Conway Propane prices were up $2.25 on the week
 

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