March typically marks the closing chapter for the heating season, and judging by winters past, is a good time for propane prices to relax into a long warm-weather lull. But right around mid-February, precisely when residential prices should begin their descent, things got interesting. First, an explosion at a storage facility at the Mont Belvieu propane hub in Texas disrupted production, and bumped up prices. Then last week, a midstream propane supplier declared force majeure on its contracts (read: took an out because of an “act of God”), slicing into the supply and prompting a trading scramble. Add the bad oil vibes radiating from the Middle East, and there was a trifecta of propane price pressures this February.
So we were left guessing: How will all this ripple downstream? The picture is still developing, but we just got a glimpse. Residential propane prices have set a new record high.
A gallon of retail propane climbed four cents (or 1.5 percent) last week, according to the federal data that came out this afternoon. That’s the biggest jump in the New Year, and a momentum changer for the recent softening on the retail side. But a more frightening stat in today’s number is that wholesale prices shot up 28.5 cents (or 20 percent) last week. As the weather warms up, demand on the remaining inventory should settle down, but the steep rise in wholesale propane will surely get passed along to customers.
Let’s hope this March is more lamb than lion.