I would like to discuss the EXTREME cold temperatures that are hitting our area for the next week. The arctic blast from the Polar Vortex is going to hang around for some time. In addition, we might see snow on Monday. If you are a will-call heating oil or propane customer, please keep an eye on your tank. Your consumption will greatly increase over the coming days. These temperatures are very dangerous so please take caution when being outside. Frostbite can happen in under 30 minutes with some of the temperatures predicted. Our drivers are working extra hard to stay ahead of this cold snap. Please make sure that your driveway is cleared and there is a safe path to your tank. We want to complete safe and efficient deliveries over the coming week.
As far as prices are concerned, crude oil continues to be volatile. The biggest news that we continue to monitor are the developments in Venezuela and the US government shutdown. The potential for lost crude imports from Venezuela could impact the US. We import about 300K barrels of heavy crude from Venezuela and the loss of that product could push up diesel prices. The government shutdown continues to put pressure on the economy. As long as the government opens soon and the Chinese/US trade teams continue to talk, we expect to see crude oil consumption stay healthy this year.
In local news, the crack spreads on diesel in the Chicago market dried up driving the cost of diesel in our market up by more than 20 cents/gallon. Our cost is now on average with the rest of the East of Rockies markets. I expect to see diesel prices at the pump rise. Gasoline retail prices continue to resist breaking back over $2/gallon. I would expect to see most markets back above $2/gallon in the near future.
Propane prices are starting to creep back up with winter weather causing healthy demand. However, production is very strong and inventories are high. So I don’t see any potential for major prices moves higher in propane this winter.
As always, if you have any questions, comments, or concerns, please feel free to give us a call.
Jon Crawford – Pres.