Propane prices retreat from highest recorded

www.recordonline.com March 20, 2003 By Chris Bender Times Herald Record cbender@th-record.com

Threats of war, record cold temperatures and the two-month oil strike in Venezuela, which ended early February, caused the price of propane to skyrocket. In the first week of March, the national average reached $1.72 per gallon, according to the Energy Information Administration. That was the highest price ever on the EIA's price survey, which dates back to October 1990. Customers in the mid-Hudson Valley are paying considerably more than in years past. Porco Gas Service in Marlborough, for instance, is charging 29 percent more this year than last. For the average home heating account, Porco is charging about $1.63 a gallon, up from $1.26 a year ago. Overall, mid-Hudson Valley propane customers are paying an average of 37 percent – or $550 – more a year than last March, according to a New York State Energy Research and Development Authority weekly report. "They [prices] started coming down," said Tom Hesslop, legislative chairman for the New York Propane Gas Association. "But prices are still dramatically above last year." Propane can be found as a gas or a liquid, and is used for heating and cooling homes, cooking and lighting. Approximately 8 million U.S. homes use propane, according to National Propane Gas Association. A typical home with propane heat consumes 1,100 gallons a year, paying an average of $1.84 a gallon, or $2,024 for the year, according to NYSERDA. With the price of oil experiencing record highs, propane prices naturally follow suit because the gas is a byproduct of crude oil and natural gas liquids. Oil prices are currently in the mid-$30s per barrel, an "unprecedented" price for recent years, said Joseph Armentano, president of the New York Propane Gas Association. To ease the financial burden on residential customers, some marketers have set up payment plans to pay bills over an extended period, Armentano said. According to Mike Taylor of Combined Energy Services in Monticello, the cold temperatures this winter caused the pipeline supplying much of the Northeast's propane to run at 25 percent of its total capacity. This prompted price increases for consumers and companies to "spot" buy or purchase propane outside their normal source. It also caused eight- to 12-hour waits for trucks looking to fill up for their deliveries. The Texas Eastern Products Pipeline may be working better due to warmer weather, but the supply for the pipeline is "historically low," said Hesslop. Watkins Glen, Oneonta and Selkirk are the pipeline's three supply terminals providing gasoline and propane for New York state. A sizable portion of the financial strain for local gas companies was transportation expenses from Selkirk to their smaller storage facilities. Taylor spent $1,200 for each tractor-trailer load, $800 more than normal. For now, prices have fallen slightly, but Armentano cautions that at the end of March there may be a major price spike like the ones in February. For now, prices have fallen slightly, but Armentano thinks a war in Iraq could bring another spike.