Our Propane Bill More than Doubled! Here’s Why…

When I opened the propane bill yesterday, my jaw nearly hit the floor.  Our propane bill had more than doubled from this time last year! Augh!  One reason for that is of course that it was much warmer last January than this. But also, the price of propane has gone up drastically. Last year (2013) in February propane was $2.40 a gallon. This year? It was $4.70.  So having consumed more propane this year to heat the house AND the fact that propane is close to double in price… oh man!

Although this isn’t being widely reported in the national news, our propane company explained that the real reason for the propane crisis (the shortage and higher prices) was due to fracking.  They wrote:

Two years ago the combination of the very warm winter and the new supply of natural gases from fracking lowered the domestic price of propane by about $1 which changed its economics in many ways.  In particular, the changed economics caused a large portion of the traditional propane supply and storage infrastructure to be reallocated to other fracking produced gas liquids.  Now with a normal cold winter a lot of the old traditional infrastructure in not available for propane fuel.

As an example, the three propane import terminals on the East Coast became economically unfeasible when, for the first time ever, the domestic price moved below the international price for propane.  And the lack of imports combined with unprecedented exports that took advantage of the price disparity in the international market created today’s critical supply situation and the much lower domestic inventories are reflected in the relative doubling of prices from last winter.

Today the whole retail propane industry is in a state of meltdown as it recognizes that the domestic supplies of propane are depleted or that what propane is available cannot physically be relocated to where it is needed for distribution and consumption.

Since we are home all day, we had been keeping the day-time temperature at 66F with it set warmer in the morning and evening and 65 overnight. But you can be sure that we ran to set the thermostat even lower… and we’ll to hunker down in the homeschool room near the wood stove even more.

So maybe this is a good lesson for the kids on economics: supply and demand… and mathematics: #of gallons x price… and environmental studies: turn down the heat!

Did your heating bill catch you by surprise?

 

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