Typecaster
06-09-2008, 03:37 PM
OK smelters—Get ready for some hefty propane price increases. Crude oil futures went up over $11/bbl last Friday to above $139/bbl, and—as usual—propane followed. Today wholesale propane prices are up about a dime a gallon almost everywhere in the country, landing around $1.90/gal. at the pipelines. Remember, those prices don't include transportation or a mark-up.
I'll be interesting to see how much of increases are absorbed by the propane marketers...they know that their customers have other fuel options so—believe it or not—they don't always pass through all the increases.
The rule of thumb used to be that wholesale propane prices were about 60% of crude oil on a per-gallon basis. That was when there was some logic to the market—higher prices in the winter, lower in summer, etc.
If the predictions of crude at $150/bbl by the Fourth of July come true, wholesale propane would be $2.14/gal. at 60% of the cost of crude.
If the retail price of propane goes up 30% it won't make much difference to my smelter, smoker, or grill. But if you have propane heat, next winter could be very expensive.
Richard
I'll be interesting to see how much of increases are absorbed by the propane marketers...they know that their customers have other fuel options so—believe it or not—they don't always pass through all the increases.
The rule of thumb used to be that wholesale propane prices were about 60% of crude oil on a per-gallon basis. That was when there was some logic to the market—higher prices in the winter, lower in summer, etc.
If the predictions of crude at $150/bbl by the Fourth of July come true, wholesale propane would be $2.14/gal. at 60% of the cost of crude.
If the retail price of propane goes up 30% it won't make much difference to my smelter, smoker, or grill. But if you have propane heat, next winter could be very expensive.
Richard