Thursday, March 13, 2014

Cold temperatures, supply problems mean average propane users are paying a lot more for heat

A federal report found that people living in rural areas and in the Midwestern U.S. who depend on propane for heat will end up spending 54 percent more for it this winter than last winter, Clifford Krauss reports for The New York Times: "Those who rely on heating oil, largely in the Northeast, will be paying 7 percent more. Natural gas consumers will pay 10 percent more and electricity consumers will pay 5 percent more."

The report by the U.S. Department of Energy found that the average cost of heating with propane in the Midwest could be $2,212 per household, $759 more than the agency projected in October, while homes using heating oil would spend $2,243, which is $197 higher than projections, Krauss writes. The problem has been colder temperatures for a sustained period, which has led to problems transporting fuels, leading to higher costs.

Temperatures this winter were 19 percent colder in the Midwest and South than last year, and 13 percent colder in the Northeast, Krauss writes. "The cold caused complications across the energy supply chain. A sudden jump in natural-gas prices raised costs for refineries that use the gas as a fuel but also as a feedstock for petrochemical products. Snow slowed railroads, which have become increasingly important for the delivery of crude from North Dakota. Unloading of fuel vessels was delayed in New York Harbor. In the Midwest, ethanol pipelines froze. Winter storms and fog even temporarily delayed shipments on the Houston Ship Channel between shipping terminals and refineries."

Krauss adds, "The harsh winter strained inventories of energy suppliers and forced utilities to switch fuels for their generators to meet demand. Limited natural-gas supplies and insufficient gas pipeline networks, for example, forced utilities to use other heavier, more polluting petroleum fuels like heating oil. After years of declines, consumption of such fuels more than doubled, to 471,000 barrels a day in the week that ended Jan. 17, from the 220,000-barrel-a-day average consumed in December and early January." (Read more)

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