When propane prices tripled in January, some consumers were caught off guard.
Are propane prices expected to soar this winter? Not likely.
“I think we are quite a ways off from that kind of scenario,” said Harold Hommes, market analyst at Iowa Department of Agriculture. “It’s highly unlikely anything that similar is going to happen. But, the biggest wild card is what Mother Nature will bring us.”
Hommes said the drastic, yet brief, increase in propane prices, consumption and demand in the third week of January was caused by a number of factors — increased use of propane for dying grain, record propane exports and an exceptionally cold winter. Another factor for a shortage of propane this year was caused by the reversal of the Cochin pipeline, which no longer ships propane to Iowa and the Upper Midwest from Canada.
With the changes, there are still some logistics to work out, but, “significant measures” have taken place between farmers, wholesalers and retailers to ensure propane supply is in place.
To manage risks, Hommes recommends the following:
• Consider an early purchase program for a fixed or maximum price plan offered by propane dealers during warmer months. Hommes said, as of Monday, the current statewide average for propane is $1.58 per gallon.
• Shop around. Some suppliers have better access to inventory during times of peak demand.
• Consider purchasing instead of leasing a tank. Consumers who lease typically must buy propane only from the tank owner.
Whatever you do, fill up early, urges Hommes.
“Demand is always up in winter,” Hommes said. “Multi-year historic data shows predictable peaks and valleys. There’s no bargain shopping for propane in January.”