Traverse City Record-Eagle

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December 13, 2013

Spike in propane prices yet to be felt by home users

TRAVERSE CITY — A late corn harvest is affecting more than just the agriculture sector.

Farmers blast hot air at their damp crops to dry them, and often use propane as a heat source.

Too much damp corn helped fuel a propane price spike in Michigan, where costs jumped from $2.02 per gallon in October to $2.25 per gallon this week.

“I don’t know if it’s unusual, but this situation with the late harvest and moisture content, it’s something that’s requiring extra energy to dry,” said Judy Palnau, a spokeswoman for the Michigan Public Service Commission. “There are a number of states in the Midwest and Great Plains that are also experiencing this shortage.”

A fire at a refinery in Illinois and an early heating season combined to aggravate the problem.

“It does cause blips in pricing, for sure,” said David Montgomery, vice president of operations at Crystal Flash Energy, a propane supplier based in Grand Rapids.

Propane is used as a heating source by people in rural parts of the state, Palnau said. The shortage most affects buyers in the Upper Peninsula and perhaps parts of northern lower Michigan, she said.

Propane prices last year in Michigan fluctuated between $1.94 and $2.14 per-gallon throughout the heating season, according to the Department of Licensing and Regulatory Affairs at the Public Service Commission, which tracks prices. Propane prices were higher but steadier in the 2011-2012 heating season, averaging $2.48.

But this year, prices may or may not drop later in the season depending on the weather, Montgomery said. Changes could bypass residential propane users, though, because most sign onto a season-long plan that sets their propane price.

“If a customer is on a pricing plan, depending on the kind of plan, they may never see the spike,” Montgomery said “But if they’ve decided to buy off the market based on market price, those folks are going to feel the spike in the price.”

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