 Albany, NY – November 8, 2007 – By all accounts, it appears that consumers will be looking at record-breaking prices for all space heating fuels this winter, including propane. The Energy Information Administration (EIA) has reported that propane-consuming households in the Northeast should expect prices to increase more than twenty percent on average during the 2007-2008 winter season.
In reality, propane retailers who deliver to customers’ homes and businesses have very little to do with the dramatic increases in propane pricing. Rising prices are the result of a much larger economic system – one they cannot readily control.
Why are Propane Prices Increasing?
Propane is derived from both crude oil and natural gas. For this reason, propane wholesale prices follow the prices of those energy sources – particularly crude oil, since propane competes primarily with heating oil. International influences also have a dramatic impact on prices. Political unrest, war, and unstable economic conditions can quickly drive prices upward and threaten supplies of crude oil needed to produce propane. As a significant importer of crude oil (the United States imports 60% of its crude oil), wholesale prices are largely controlled by foreign suppliers. In addition, the rising demand for propane in India, China, and other Southeast Asia countries drives the wholesale price for available fuel higher. Finally, colder temperatures during the winter months increase the demand for propane, particularly for home heating.
All of these factors can lead to reduced supplies and higher prices – not just for propane, but for all fuel sources.
High Winter Fuel Prices
November 8, 2007
How Can Propane Dealers Help Consumers Cope?
Propane dealers work hard to protect consumers from rising prices. Many retailers purchase advanced supplies of propane at the best price possible to protect themselves and their customers from the potentially higher seasonal prices. Most dealers offer budget payment plans that enable customers to spread the projected annual cost of propane over many months. This allows consumers to control their energy expense in a predictable manner. Dealers also offer automatic delivery to credit-approved customers so that the tank stays full at the most critical times of the winter when needed most.
In addition to the common suggestions related to insulation, caulking and weather-stripping, propane customers can take some additional important steps to lower their overall energy bills:
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Invest in a thermostat that can save money by lowering your home’s temperature when you are not at home. You can cut annual heating bills by as much as 10 percent per year by turning thermostats back 7 degrees for eight hours per day.
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Change furnace filters on a regular basis – at least 3-4 times per year. Clean filters will help your heating system work more efficiently.
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Replace electric water heaters and clothes dryers with equipment fueled by propane. Over time, propane water heaters can cost one-third less to operate and will recover hot water twice as quickly as electric water heaters.
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Inspect and tune-up your heating system for increased efficiency. A properly working heating system is more efficient and will save you money.
For more information, consumers can visit the New York Propane Gas Association at www.nypropane.com or the Propane Education and Research Council at www.usepropane.com.
About the New York Propane Gas Association (NYPGA)
NYPGA is a member-focused trade organization providing services that communicate, educate, and promote the propane industry in New York. The association was formed in 1948 to offer opportunities to learn through training and networking with peers, and to aid with legislative issues that contribute to operating a safe and successful industry. As a heating fuel, propane is growing in popularity throughout the United States. According to a survey conducted by the National Association of Home Builders, more than 65% of homes built in the past year featured natural gas or propane. Propane extends the benefits of clean-burning and efficient gas appliances beyond the natural gas mains to suburban and rural areas.
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