LP Gas, April 2013

While the retail propane price in the Northeast ended up about 5 cents per gallon higher than EIA expected last October total expenditures by the average household in the Northeast were about 2 percent lower than originally forecast Lidderdale says The average Midwest household saw propane prices that were almost 30 cents per gallon lower than expected last October Total expenditures were about 17 percent lower than originally forecast and it was the lowest level of expenditure in that region since the winter of 2004 05 As of mid March 30 percent of the nation had a snow pack on the ground Last years figure was 20 percent and all of it was west of the Mississippi River From the retailers Ive talked to its been spotty says consultant Mark Bailey at Propane Resources as he sizes up the season Its been a little better than last year but it hasnt been super duper A warm fall meant that there was more of a hangover from last year regarding supply The fall fill kind of kicked off the season The cool spring we have now is setting us up well for next year Bailey explains concurring with Alexanders Steady Eddie designation Thats probably about right There havent been any major ups and downs Its been a pretty good first quarter for retailers as far as demand goes adds Propane Resources Reid Simonett Weve had an extended winter for a change Last year at this time the farmers were out in their fields planting crops Simonett encourages the industry to start preparations for the 2013 14 winter You should be planning right now he advises but not a lot of retailers have gone into the marketplace because of the lower prices that we had last year Theyre anticipating that pricing will come down with the excess propane thats available but that will go to the export market Getting creative Dont do any buying until you have your customers already lined up Lock in your customers and your margins says consultant Dale Delay president of Cost Management Solutions LLC Speculating can be fraught with risk Most propane retailers are in a buy them and hold them strategy Delay says Its a very fine tuned balance You may get stuck with propane at a price you cant sell Were keeping an eye on the marketplace but we havent started purchasing yet says Dead Rivers Guerette also treasurer of the Propane Gas Association of New England PGANE Several cold fronts that brought treacherous conditions buffeted the region We pretty much weathered those storms unscathed Guerette says We work around the weather We pull trucks off the roads when it gets nasty and we work weekends to get caught up WINTER ROUNDUP By the numbers The EIAs annual household propane heating expense estimates This year Last year Change Northeast 2338 2386 12 percent Midwest 1382 1539 101 percent This years average per gallon pricing was at a lower level Northeast 3 per gallon 112 percent Midwest 173 per gallon 214 percent Propane consumption in 2012 13 in the Northeast and Midwest experienced a rise in comparison to last years usage figures according to the EIA Northeast 114 percent Midwest 143 percent Having an adequate amount of propane is a prerequisite for successful operations We added to our infrastructure in 2012 Guerette explains Looking at storage is something that were always considering We have about a dozen supply locations that we lift from so it minimized any allocation impact reports Charlie Ermer supply and pricing manager at New Hampshirebased Palmer Gas Ermer Oil Propane procurement avenues include pipeline rail and ship When the ice and snow flew we got creative with allocating the companys resources says Ermer who chairs PGANEs outreach committee We added shifts on the weekends that was our workaround and that helped us stay on track with our customers needs The heating season started out on the mild side so we eased into it and then it caught up with the degree days he adds Generating business Propane powered generators have become an important element of the business as New Englands residents see the value of securing an alternate source of electricity Each time we get a storm it generates a lot of calls into the office Ermer says Thats become a very strong market for us More people are also opting to switch from fuel oil to propane as their primary heating source when their older systems require upgrades according to Joe Trefethen Palmer Ermers general manager Offering budget plans with a year round fixed payment schedule has proven to be popular as well Looking ahead to next year weve been watching the market quite closely for the right opportunities Trefethen says We start our programs in April or May depending on market Continued on page 16 www LPGasmagazine com April 2013 LPGas 15