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High propane prices expected to settle down

BY HEATHER COLLINS

A drastic rise in the cost of propane in the winter months across North America has left many who rely on the fuel baffled at the fact prices have doubled and even tripled in some cases. But some hope is in store as prices are predicted to start to come down in the near future.

“It’s gone down already. I’m getting my first load of cheaper propane today. Two days ago it dropped and two days from now it will drop again and they have been pretty substantial drops,” Don Smith, owner of Try Smith Propane in Red Lake, said on Feb. 21.

The price of propane in Red Lake started at $0.72 a litre for the season and hit a season high of $1.19 a litre. The predicted approximate price for Feb. 28 is under a dollar at $0.99 a litre. Smith explains why propane price is subject to such drastic lows and highs in cost:

“Propane is much more volatile. It is not like gasoline that steadily climbs. Propane will go up and down. I was selling propane six or seven years ago at the same $0.72 a litre price. It is completely driven by market conditions. There was a huge shortage. That’s what drove the price up. I buy from the wholesaler and the wholesaler buys from the refinery. The refinery sets the price and everybody pays the same for propane.”

“There have been three big reasons that have lead to this season’s spike in cost,” he adds. “First, America sold off all their inventories, which Canadian propane companies love because they pump huge amounts of propane to the U.S.

Secondly, the biggest wheat crop in the last 20 years happened all over North America. Wheat has to be dried before it can be put in a silo for storage and it’s all dried using propane and that depleted inventories more than a normal fall would have.

And third of all one the most severe winters we’ve seen in decades definitely put a strain on infrastructure. We barely were able to keep up ourselves.”

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