Arctic cold pushes Midwest propane prices to record

  • Article by: DAN MURTAUGH, NAUREEN S. MALIK and ELIOT CAROOM , Bloomberg News
  • Updated: January 21, 2014 - 8:09 PM

Extreme cold this winter has put a strain on already thin supplies.

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Greg Rohde commuted to work to the University of Minnesota on cross-country skis in frigid minus-20 weather in Minneapolis this month. This year’s unusually cold winter is pushing fuel prices up.

Photo: ELIZABETH FLORES • eflores@startribune.com,

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Propane prices in the Midwest surged to a record high as a cold snap whips up demand for the heating fuel while record exports have depleted stocks.

Arctic air is returning to the United States after frigid weather set records across the Midwest earlier this month and readings dropped to single digits far into the South, according to the National Weather Service. The low in Minneapolis-St. Paul on Wednesday night is expected to drop to minus 14 degrees, 21 lower than average, while Chicago will drop to minus 1, 19 below normal, said AccuWeather Inc.

Extreme cold this winter that closely followed a surge of demand for the fuel to dry corn crops exacerbated a supply constraint, forcing several Midwest states to implement emergency delivery service to households. U.S. supplies of propane have fallen to the lowest level for January since 2001 as the country is shipping record levels of propane and propylene abroad from new export terminals on the Gulf Coast.

“People had swept all their stuff to the Gulf Coast, and they didn’t think it was going to be all that cold,” said Anne Keller, manager of natural gas liquids research at Wood Mackenzie, an energy consulting company in Houston. “Oops.”

Spot propane at the Conway, Kan., trading hub jumped 70 cents to $2.45 a barrel, the highest since at least January 2008. Wholesale prices at the Mid-America Pipeline Co. terminal in Conway ranged from $2.16 to $2.62 a gallon, the most in records going back to 2007.

“Two months ago, I would have told you the United States had the lowest propane price in the world except for Saudi Arabia,” Joe Rose, president of Propane Gas Association of New England, said. “Now in the last week, that price has just gone crazy.”

About 10 percent of homes in the Midwest used propane for heating in 2012, according to data from the U.S. Census Bureau.

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