Cold, hard facts about heating
By Brandy Nance
Originally published 01:09 p.m., June 13, 2008
Updated 01:09 p.m., June 13, 2008
When the price of gasoline rises, the price of propane and natural gas rises as well. For some customers, that might mean trying to lock in propane prices early while the rates are good. Still, it’s anybody’s guess what the prices are going to do this year.
Jim Shepherd of S&S Oil and Propane, 2608 W. Highway 50, said the price of propane is currently 50 cents a gallon higher than last year’s prices. He said the price is hard to predict — just like gasoline prices.
“That’s the future we all don’t understand or don’t know and can’t see,” Shepherd said. “If crude oil and natural gas prices stay where they are, we will see higher prices between now and next winter … the future is always a little uncertain.”
The same holds if prices go down, Shepherd added.
“It appears that all energy tends to move together,” he said. “The cost of propane and natural gas, gasoline, electricity … as one goes up they all tend to go up. As one goes down they all tend to go down … we get some imbalances sometimes, but they tend to correct themselves.”
Shepherd said S&S customers could lock in prices at any time. S&S has the ability to store propane and deliver it to the customer when they need it. Customers can pay money up front for their propane and make monthly payments between now and March or the entire balance up front. They will be locking in prices at the current market rate. As of Monday, the rate would be at $2.07 a gallon at 100 percent pre-pay. Payment plans range from $2.19 a gallon on the high end and go down from there.
Ardie Lauxman, comptroller at Neosho Valley Energy, said residents could expect to see a 50- to 75-cent-a-gallon increase over the price they paid last winter, depending on what they contract for and when they take delivery of the propane.
“(Prices) have been going up pretty steadily since last winter,” Lauxman said. “To help our customers out, we are encouraging them to contract.”
Lauxman said Neosho Valley Energy has been buying propane over the last several months to get a good spectrum on the price market. Propane is stored in layers at the price it was purchased for.
“We look at the markets daily,” Lauxman said. “If there’s a buy on the market, we try to jump on there.”
There are several factors that Neosho Valley uses when pricing propane for customers. The company has to consider the cost of hauling the fuel to customers.
“We’re trying to look at ways of economizing the rolling costs of those trucks,” Lauxman said. “It obviously adds to an overhead that we need to make sure we account for so we can deliver it to the customer at the best price.”
Lauxman said the prices have driven a lot of the smaller distributors out of business.
“So we not only have to account for customers that we have now but the ones that we might end up with in the wintertime,” he said.
The company is trying to spread the word about its budget plans. Budget plans allows a customer to be on a payment plan throughout the year and build up a credit for winter. Lauxman said the company is encouraging customers to get on a keep-full plan, which means their tank will be topped off when a truck is in their area instead of waiting for the customer to call.
Natural gas prices also are expected to rise this winter. Natural gas is the fuel that is delivered by underground pipes in cities and towns. Al Walker Jr. of Kansas Gas Service, which serves Emporia, said preliminary estimates predict a 25 percent to 40 percent increase in the price of natural gas.
“Right now, energy analysts are predicting the cost of natural gas is going to be even higher this winter as compared to previous winters,” Walker said.
Walker said it’s too early to put actual numbers to this winter’s fuel costs.
“That story has not really been told yet,” he said. “... To put that in a real number, it’s too early to tell.”
Walker said natural gas prices track with oil and fuel prices.
“Right now the natural gas market is extremely volatile,” he said. “As the price of fuel oil goes up, so does the price of natural gas.”
Kansas Gas Service is trying to prepare Kansas customers now for higher fuel prices this winter. This month, the company already is paying record prices at $10.70 per 1,000 cubic feet. The company is encouraging customers to get on an equal pay plan, which takes the customer’s average bill and divides that equally over 12 months. Walker said the plan is an opportunity for customers to budget and avoid a sharp increase in the winter. At the end of the season, the average will be re-calculated, he said.
Another program that helps ease the burden for those who can’t afford their utility bills is the Gift of Warmth program. Walker said customers can pay extra on their bill to go toward this program. The funds are funneled to the Salvation Army and helps residents in paying their utility bills. It’s not just for natural gas, it goes for whatever the customer uses for fuel.
In light of higher prices, Walker said now is the time to start taking measures to conserve energy this winter.
“Put those energy measures in place right now because it’s difficult to secure the thermal envelope in the home in the winter,” he said.
Walker suggested checking caulking and weather stripping and making sure insulation throughout the home is adequate. Also thermostat management is a good idea by maintaining a temperature that is comfortable but that is as low as necessary.
“That really depends on people’s lifestyles,” Walker said.