Propane prices could soar as much as 100% this winter, leaving millions of rural people to bundle up or shell out thousands of dollars to heat their homes.
The average wholesale price per gallon of propane is currently a dollar higher than this time last year, having increased from around $0.60 last October to $1.60 now, according to the Energy Information Administration. In some places, such as Mont Belvieu in Texas, the price is three times higher than in the past several years.
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Propane costs may increase an average of 29% this winter, with some areas paying 56% more even if the season is warmer than normal, the Wall Street Journal reported. If the season proves to be colder than normal, consumers could see their costs double. This could mean an increase of $1600 to $2000 in home heating costs, depending on the region.
The price surge spells bad news for the 5% of American homes heated by propane, mostly in rural areas. It may also drive up prices of other products and services, as propane powers construction equipment such as forklifts and is a key ingredient in the plastic polypropylene.
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Though all methods of heating are expected to be more expensive this winter, natural gas and electricity are protected from the market fluctuations in ways propane is not.
Propane stockpiles are 19% lower than average for this time of year because sellers don’t see a reason to hold back when the prices are already high. Providers usually wait until the weather turns and demand increases to start selling domestically but have continued exporting propane to places such as India and China throughout the summer and early fall.
