Propane prices on the rise, too

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Propane prices on the rise, too By JASON PISCIA STAFF WRITER

As part of his job with a utility company, Bill Chestnut watched this year as natural gas prices inched higher and higher.

And although Chestnut - who works for Dynegy in Decatur and lives along Illinois 97 near Salisbury - heats his home with propane, he had a feeling his heating bills would be going up, too.

That's why Chestnut is among many propane customers who decided in late summer to lock in a price for a certain amount of propane.

"I just had a funny feeling that the prices were going to go up, so that's why I locked in," he said. "Usually I don't."

So far, Chestnut's decision is paying off. He locked in a price of 95 cents per gallon of propane for an amount that should keep his tank filled into February. Many propane marketers are charging in excess of $1.30 for a gallon, up from less than 80 cents a year ago.

The reasons for the propane price increases are directly related to the price spikes that have natural gas customers dealing with monster-sized bills this winter. Propane is a byproduct of natural gas processing and crude oil refining.

And the price outlook for propane customers is about as dim as those who use natural gas.

"It is anticipated that, like natural gas, propane (prices) will either hold steady or increase, but everybody's sort of leaning toward an increase," said Tim Garman, a spokesman for the Springfield-based Illinois Propane Gas Association.

With propane inventories already low, the early blast of winter in Illinois helped fuel the high prices. And with the high cost of natural gas, many refineries are finding it's not as profitable to take propane out of the natural gas stream.

"The refineries find that it's just cheaper to pass (the natural gas) on down and not even bother to strip (the propane) out," Garman said.

Those factors, along with an aging pipeline network, are leading to regional shortages of propane, prompting some suppliers to limit the amounts marketers can buy from them.

Garman said allocations are being seen mainly in southern Illinois so far and are slowly moving north. But he said there will be enough propane for this cold season.

"At worst we'll see severe allocations, but as far as running out - no," he said. "What will happen is if (marketers) can't get it at their regular supplier, then they drive farther to get it. It is available out there. It's just a question of how far you have to go to get it."

Champion Gas & Oil Co., which supplies propane to homes throughout central Illinois, is beginning to see allocations at its suppliers, said general manager John Kirchgesner.

But since the company deals with at least four suppliers, it can get enough propane for its customers.

But Kirchgesner said his truck drivers have had to wait in long lines at supply stations to receive loads of propane. Adding to the challenge is the recent treacherous weather. Icy and snowy conditions earlier this month led Kirchgesner to order his drivers to postpone their residential deliveries.

"For me to put a $72,000 truck out on icy roads isn't a very good idea," he said. "Not only is it unsafe for him, it's also a danger to the people in the neighborhood."

Jason Piscia can be reached at 788-1525 or jason.piscia@sj-r.com.

http://www.sj-r.com/news/00/12/30/c.htm

-- Martin Thompson (mthom1927@aol.com), December 30, 2000


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