Propane prices starting low, could stay low

Donna Fremming and some of her neighbors in Scatchet Head have a very warm feeling about the propane stored in the tanks outside their homes.

Several dozen of the neighborhood’s residents are taking advantage of suddenly-lower propane prices this fall. After the commodity hit record highs of more than $1.80 per gallon during last winter’s energy crunch, Fremming and her neighbors negotiated with a Burlington propane company for a lower, bulk-rate price on their propane.

Now, with propane prices bottoming out near $1.12 for residential customers elsewhere on South Whidbey, Fremming said she and her husband are getting bills for propane at 99 cents a gallon for the first time in two years. No wonder her neighbors followed her lead last year to switch propane companies and get in on this neighborhood pricing deal.

“It seems like quite a few,” said Fremming, who wasn’t sure exactly how many people are getting the same deal on propane.

It hardly matters. Compared to the huge spikes customers saw in the fuel’s price last year, any reduction is good. This week, South Whidbey propane retailers reported consumers could spend between $1.12 and $1.38 per gallon on propane, depending on how much they use. Even at the high end, the news is good for people who had to heat their homes, their water and cook for up to 50 cents more per gallon last year.

Wayne Emerick, a manager for Northern Energy’s Freeland propane outlet, said high temperatures through mid-October kept demand for the fuel low and supplies at nearby refineries high. He said he does not see any reason for a major price increase during the next 30 days.

“We’re in good shape right now,” he said.

Last year at this time, the early stages of a drought had the West Coast electricity industry claiming that it could run low on power due to low water reserves at Washington and Oregon hydroelectric plants. At the same time, the price of gasoline and natural gas rose sharply, pushing refineries in California and Anacortes to start using the propane they produce as the primary fuel for their operations. As the propane supply ebbed, prices jumped.

Corey Oil and Propane owner Nathan Corey said projections earlier this year seemed to forecast more bad news for the hundreds of propane and heating oil customers he supplies.

“We were hearing dire circumstances in the spring,” he said.

Fortunately, he said, the price of crude oil, gasoline and natural gas fell during the summer, which left a supply of less-expensive propane for this winter.

“Everything’s come way down,” he said.

With any luck it will stay down. Citing the war in Afghanistan as the only possible variable in the pricing equation, Steve Olsen, a manager with Burlington’s Ferrellgas, said he is looking forward to an uneventful winter in the propane business.

“It looks like it’s going to be much more stable,” he said.

Ferrellgas is the company giving the Scatchet Head residents its neighborhood pricing deal. He said such deals are common in the propane industry, but are generally not promoted. Neighborhood groups need to ask for the lower price.

Propane companies price their fuel based on the amount of gas a customer uses. Unlike the electric industry or water companies, propane retailers offer lower prices to customers who use more of their product. Customers who have larger homes and families and who have water heaters in addition to a gas range and a gas heating stove or furnace should see a lower price per gallon than someone who just has a gas range.

Fuel oil customers will get as good a deal on their fuel this year as propane users. Though the price for oil is a few cents higher than propane, Nathan Corey noted fuel oil produces more heat per gallon than propane.

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