As energy prices in general get higher, more and more people are locking in their propane prices early, according to the companies that serve the Emporia area.
“Currently, well over two-thirds of our customers get a contract and try to protect themselves,” said Jon Vopat, the propane manager for S&S Oil & Propane. “Every year, the number of people that do that seems to get bigger. Over the last five years, I would say the number of people who contract has doubled, because they don’t want the variables that come with (propane).”
Right now, both S&S and competitor Neosho River are selling propane for $1.49 a gallon up front or $1.54 for automatic monthly payment options. Another competitor, Ferrellgas, currently offers $1.34 a gallon. But as with gasoline, today’s propane price doesn’t promise anything tomorrow.
The biggest factor in setting propane prices tends to be the weather. Some of that’s predictable — prices tend to rise each winter, for example, especially if extremely cold weather has been forecast.
“My guess is it’s going to go up this winter,” said Terri Lofdahl of Neosho River. “When the almanac came out with its predictions, it said it’s going to be snowy, wet and colder. If we get that, there’s going to be more demand and that’s going to drive the prices up.”
At the other extreme, hurricanes in the Gulf Coast can send prices through the roof, as Hurricane Katrina did last year. Propane is produced in areas where oil is refined or natural gas processed, and anything that disrupts those resources disrupts propane as well.
But it works the other way, too. If the weather stays stable, prices probably will, too.
“So far, it’s been calm, knock on wood,” Lofdahl said.
When the weather changes can be just as important as how it changes, according to the U.S. Department of Energy. If a winter gets cold early on, for example, supplies of propane gas will be drawn down more quickly and affect the availability for the rest of the winter.
Oil prices also have a more indirect effect on propane prices, according to the energy department. Since the two fuels compete with each other, a change in the crude oil price usually produces a change in propane costs as well.
Even war news can affect the price, Vopat said, and for the same reason as a hurricane: If anything happens to affect an oil-producing region, it tends to affect propane supplies, too.
With so much potential for change, then, it may be no wonder that customers want to lock in a set price for a year.
“We’ve had a lot more customers lock in this year than in the past , because they’ve seen what prices have done in the past,” Lofdahl said. “There’s probably a good 24 percent more (locked-in contracts) than we had last year.”
Scott Brockelmeyer, a spokesman for Ferrellgas, said his company has seen the number go up as well.
“Obviously, with the volatility in all energy prices in the recent year, it’s something more and more people are paying attention to,” he said.
He also suggested that now might be time to top off the propane tank, before winter hits.
“Check the percentage in your propane tank and consider calling your propane company,” he said. “The price you pay when winter comes historically has been and will be higher.”