Propane tops list of rising fuel costs | News

TRAVERSE CITY – Suttons Bay-based Bill Hathaway will take the brunt of rising propane prices to keep his home warm this winter, paying about $ 1,000 more than last year.

The US Energy Information Administration predicts that households that rely on propane for heat will spend 54 percent more than last year, those who use natural gas will spend 30 percent more, and those who heat with electricity will spend 6 percent more. And with the season expected to be a little colder than last year, households are likely to use more fuel.

Hathaway, 85, keeps his house a cool 60 degrees all winter. Last year he turned to Leelanau’s Christian neighbors, who help needy seniors to pay for their heating bills. He also used the available federal funds, he said.

This year, thanks to a federal weathering aid program, the retired machinist will get a new boiler that will cut his heating bills.

“I’ve paid taxes for this all these years so I wouldn’t feel bad,” said Hathaway, although he’d rather not have to accept the help.

Nationwide, around 5 percent of households heat with propane. In Michigan, which uses more propane than any other state, about 320,000 households run on propane.

The main reason for the higher heating bills this winter is the recent price hike for energy commodities after falling to multi-year lows in 2020. Demand has grown faster than production as the economy has come back to life after the stalemate caused by the coronavirus.

This week, the average propane price in Michigan is $ 2.47 a gallon; It was $ 1.65 in 2020 and $ 1.69 in 2019, according to the EIA, the Department of Energy’s statistical arm.

Sheila Wick is the Northport Office Manager for Bayshore Oil & Propane. There are a few reasons that are causing prices to skyrocket, she said, the biggest being the COVID lockdown.

“Not much was produced because many plants were closed,” says Wick, whose husband owns the company.

The factories have reopened due to a labor shortage, she said, and are unable to keep up with demand.

“It’s the same with gasoline,” said Wick. “I don’t know where people went.”

Most propane companies buy ahead of time for the winter and let customers lock in their prices for the season so they don’t have to weather the storm of a fluctuating market.

At Bayshore, which serves approximately 2,000 customers in Leelanau, Grand Traverse, and Benzie Counties – including Hathaway – everyone is automatically rate bound from October 1 through March 31. However, this year’s price of $ 2.14 per gallon is about 46 percent higher than last year’s $ 1.47. The average winter residential propane use is 1,000 to 1,200 gallons, she said.

“That’s a huge increase,” said Wick.

Lt. The Salvation Army’s Matthew Winters said the agency was ready to help people with their higher heating bills. The Salvation Army works with the state emergency aid program and has its own Project Good Neighbor Fund, which comes from local donations.

At Christmas, donations are high again, like last year in the midst of the pandemic and job cuts, said Winters.

“We will be able to cover (higher heating costs) – absolutely. This fellowship is generous, ”he said.

Winters said because there was a lot of federal aid last year, the number of people asking for help all the time has decreased. But there were also many people who needed help for the first time.

“We saw families struggling, it was almost embarrassing to ask for help,” said Winters.

Brad Morrill, chief customer experience officer at Crystal Flash, said the majority of the company’s customers have already set their fuel prices, which are for the full year June 1 through May 31, serving much of the state and prices vary by region to region.

“Those who have not fixed their price can easily expect them to fluctuate with the market price,” said Morrill.

Some customers feel they may pay less because they can take advantage of the March and April price drop and their costs may offset each other, he said.

But it’s a big risk, especially this year, he said. There is also a delivery fee for those who pay the market price.

The overseas market contributes to the high prices as nearly half of the country’s 2 million barrel daily production is exported to Asia, Latin America and Europe. It’s a dramatic change from less than a decade ago.

Inventories of U.S. propane and propylene, a propane-like fuel, declined 0.2 million barrels to 74.6 million barrels in mid-November – a decrease of more than 13 percent from the average five-year inventory from 2016 to 2020, according to this the EIA.

Producers have gotten better at transporting propane and natural gas, which are highly volatile substances, and no longer stockpile like they have in the past, Wick said.

“The overseas market is in high demand and the producers here are sending it overseas,” said Wick. “We just don’t have the reserve supply that we normally have.”

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