Business Spotlight: Lower Propane Pricing Ahead

— from Brian Vanderyacht —

The stable propane prices this winter season compared to years past seems to be the result of the growing production of local crude oil. The local crude oil supply is a “sweeter” crude that results in more volumes of the lighter by-products, including propane.

Last year abnormally high prices were present in the midst of the building local crude supply. The higher prices came from a combination of extreme weather in the Midwest and East Coast areas, large scale infrastructure problems and, because of these issues a run on the inventory when distribution became available drove prices up even higher.

This year the continuing inventory builds haven’t been hampered by mechanical problems or long extreme weather events and have created the supply and demand ratio that has been forecasted for the last few years. This has resulted in very even pricing throughout this winter. Long range forecasts support continuing price structures that favor a leveler curve.

At Vanderyacht Propane, a local family-owned business, it is important for us to keep abreast of the bigger picture so that we can react when issues have foundation and ride out issues that are “flash in the pan” hiccups that may be caused by commodities brokers or some other short term anomaly. When the Owners are shopping in the same local communities and island as the customers it’s important to be able to be accountable.

$.085 per Kw equals $2.295 per gallon approximate. With water heat recovery time and electric appliance wear and tear vs. strong heat from a flame for years, a homeowner could save $200 – $300 this year on a propane home vs electric home.