Last winter propane prices spiked from less than two dollars per gallon in December to more than five dollars per gallon in January.
The spike was driven by a record year for the need to dry grain, an unusually cold and early winter, and record propane exports that reduced domestic inventories.
Executive Director of the Missouri Propane Association, Steve Ahrens, says all those pieces are still in place.
“We’ve got infrastructure constraints, the export market is bigger than it was last year and it will be bigger the year after this,” says Ahrens. “We’re also looking at a couple of the variable impacts that hit us last year that appear to be the same this year. The grain crop, for example, they’re calling for 300 to 500 million barrels of propane depending on how wet the corn crop is this year. That would put the same strain on the early inventories of propane … we’ve also seen a number of forecasts that seem to indicate that we will have, in the Midwest, about as cold a winter with perhaps more snow than we had last year.”
Ahrens says many propane users remember what happened last year and are doing the right things to combat high prices. For those that own their own tanks, that includes making sure to fill it early and to pre-buy to lock in prices.
Ahrens says shopping around could prove to be a bad idea.
“If you’re shopping around and we have cold weather and the supplies get tight, you may not find a supplier who can handle your needs at any price,” says Ahrens. “Propane retailers are going to be dedicated to the people that committed to them during the year. They may not be able to handle your request.”
“We think the time is now,” Ahrens says about purchasing or pre-buying propane. “Don’t wait around, don’t wait ’till the weather gets cold, because … no one has any leverage once the weather gets cold, on pricing.”
Attorney General Chris Koster, when his office completed an investigation into high propane prices, also cautioned that the same problems that caused spikes could return.