Area consumers feeling the heat from inflated propane prices By Patrick Davarn

MONTROSE - Local consumers who heat their homes with propane are dealing with higher prices this winter, but assistance is available for those who qualify.

Prices for propane, a byproduct of crude oil and natural gas, have risen significantly over the past year. The average price of propane in Colorado is about $1.50 per gallon, the Associated Press reports, up from 90 cents a year ago.

"The price (increase) is outrageous," said Montrose area resident Brice Lee. "We just bought (propane) for about $1.40 a gallon a couple of weeks ago. It seems like the highest we paid last year was about 92 to 93 cents per gallon."

Chuck Madison, executive director of the Colorado Propane Gas Association, said it's difficult to predict the future, but most likely prices will continue to increase.

"It's anybody's guess at this point," Madison said. "We're looking at the potential for shortages, but marketers (distributors) throughout the state are working around the clock to keep adequate supplies for their customers."

Locally, propane prices are showing a wide fluctuation. Two local outlets are posting prices of $1.40 a gallon and $1.80 a gallon for residential use.

Jane Deines, one of the owners of Hometown Propane in Delta, said her current price for residential propane is $1.40 per gallon if charged, and $1.35 when a bill is paid within 10 days.

"Right now the price is just high, but it costs us more to buy (propane) too," Deines said, adding Hometown Propane's price at this time last year was about 99 cents a gallon.

Mary Kessler, manager of the AmeriGas outlet in Montrose, said her company's current residential price is $1.80 per gallon, about 60 cents higher than it was at this time last year. She added that AmeriGas also has a policy of lowering its price by 2 cents per gallon for first-year customers.

Prices have soared this winter because supply is limited and demand is high for all heating energy sources based on current weather trends and winter projections, Kessler said. Madison agreed that propane prices are set mainly by supply and demand.

"It's a free market commodity, and all prices for oil, natural gas and propane went up last summer," Madison said. "About 75 percent of propane comes from crude oil, the remainder from natural gas. So when prices for oil and natural gas went up, propane went up."

Madison also said most rural distributors have little control over prices.

"Normally, they stock up when prices are low to insulate themselves and their customers from higher prices," Madison said. "But last summer the prices never went down. Many marketers in the state have insulated their customers from the higher prices by lowering their margins, but it still amounted to huge increase in price - in some areas double what it was the year before."

Madison said not every marketer has the same cost of doing business. "If you have a higher cost of doing business, or were unable to buy propane as low as your competitor, you have to pass that on to the customer," Madison said. Deines said her company buys most of its propane from Oklahoma-based Powderhorn Petroleum, which operates refineries around Colorado. "We deal mostly with this company, but we do have other places where we can get it from," Deines said. "They take good care of us." Kessler said AmeriGas Corp. has a purchasing department that orders propane from many sources.

"AmeriGas customers should be confident that AmeriGas will keep them supplied with propane this winter," Kessler said. "As one of the nation's leading propane companies, AmeriGas has many long-term supply contracts that will meet our customers' needs." Kessler's best advice to customers is to lock in a price before winter.

"We offer the Ameriguard program in the summer, which is a guaranteed rate for the whole year, or we suggest that customers do a pre-buy at a guaranteed rate," Kessler said. "That will save a customer a tremendous amount of money. We also ran this program through November, strictly to help our customers." Peter Shelton, who lives near Colona, said he considered a guaranteed price offered by his supplier last summer and last fall, but decided not to take it.

"When it was first offered, $1.34 seemed like a considerable jump from the ... price (at that time)," Shelton said. "The last time we bought propane, around the first of the year, it was for $1.58." Shelton said he is "getting by" because "we built a super-efficient" home two years ago. "It's well insulated and partially solar-driven. We don't burn much (propane) gas and although I've only got one and a half winters to base it on, I'd say we typically go between two to three months on about 300 gallons of propane."

Lee said although the price of propane is higher than last year, it hasn't yet dramatically changed his heating practices. "We try to keep the thermostat down a bit and burn a little bit more wood for heat, but overall I'd say we're using about the same amount of propane," Lee said.

Deines and Kessler said their companies each have four delivery trucks to serve area customers. Both also said they serve more than 2,500 customers in this area, which encompasses the Montrose, Olathe, Delta, Ouray, Ridgway, Hotchkiss, Crawford, Cederedge and Paonia communities and other nearby residents. Kessler said AmeriGas also serves customers in the Ophir, Nucla, Naturita and Norwood areas.

http://www.montrosepress.com/news/stories/021401n2.html

-- Martin Thompson (mthom1927@aol.com), February 14, 2001