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Tight propane supply means price increase   ADVERTISEMENT

Tight propane supply means price increase

TRI-COUNTY AREA—A propane shortage in some areas across the country has resulted in a sharp price increase since this time last year. General Manager of Phelps Sungas Inc. in Geneva Brad Brooks said the current price for a new customer is $2.79 per gallon, which is up 40 percent from this time last year. Vice President of Phelps Sungas Inc. Roland Penta said while his company is in “good shape” compared to others, they are currently overwhelmed with requests by new customers. Penta said while Sungas has not run into any delays or interruptions with their gas delivery, he has heard many companies are not taking on new customers at this point.
Penta said the problem began developing 30 days ago, adding central New York is actually better off than other parts of the country, including the midwest. Manager of Investor Relations and Treasury at AmeriGas Simon Bowman said there are “tight supplies” of propane across the country that have caused the wholesale price to increase more than 60 percent in some locations since last year.
According to the National Propane Gas Association (NPGA), the issue began back in October due to abundant grain harvests combined with the interference of regular propane distribution due to certain pipelines being down. The NPGA said this triggered a chain reaction causing suppliers to go further out to load their supply. Combined with the recent wave of cold weather causing a higher demand for home heating needs, the increased demand for propane has resulted in a more restricted supply than normal.
The U.S. Department of Energy reported the cold weather led to record-high natural gas and propane storage withdrawals. According to the U.S. Department of Energy, “emergency conditions could be forming, as consumers and businesses in dozens of states are faced with higher electricity and gas costs due to persistent cold weather.” The NPGA said increased gas exports also played a factor in the shortage, with more than 20 percent of total U.S. propane exported in 2013, up from 5 percent in 2008.
Bowman said despite the tight gas supply, if temperatures go back to normal or warmer, the situation can improve in as little as one or two weeks. He said if temperatures continue to get colder, however, the situation can become drawn out even longer.