This week at one point, two-thirds of the entire nation was below freezing. That hasn’t happened in over sixty years! The entire state of Texas went below freezing and into negative temperatures in some parts. The electrical grid was unable to handle the storm and millions of people were left without power. In addition to the electrical disaster, natural gas lines and water lines froze all over. Millions of people by mid this week were without electricity, heat, and water. The snow and cold shut down the entire oil and natural gas industry in Texas, which in turn shut down much of the propane production. Natural has prices prices traded as high as 1,000% over previous day’s cost (yes, 1,000% increase in one day), and propane prices skyrocket over 60%. To put things in perspective, the increase in propane price would be the equivalent of waking up and seeing the price of gasoline at the pump almost $2/gallon higher overnight! That’s $4/gallon gasoline!
WTI crude prices broke through the psychological barrier of $60/barrel. Gasoline and diesel spot prices also went on a run higher, chasing crude prices and the news stories of the day. Overall, energy prices were shocked as if a hurricane decimated Texas and the damage from the subzero temps to crude refineries, wells, and pumps is still left to be determined. We know that warm temperatures have landed in Texas and next week will be telling. I do believe that prices will start to ease as the warmer temps move through the nation and production resumes. But for now, we are trying to control our retail prices as best we can as the cost-increase shock works its way through. Prices are moving as much as 40-60 cents per gallon in one day! Please have patience as we navigate through the coming weeks. I can assure you that if you call around and hear propane prices from companies that are a difference of 50 cents to a $1.00/gallon, it’s not crazy. The market is truly that volatile right now. We are doing our best to hold our prices at the lowest averages possible to try and help our customers absorb these increased heating costs. The good news is that I think by the end of next week, cost of propane will start to retreat, and we are not in a full propane supply crisis at the moment. We are still able to deliver and do not see shortages or rationing on the horizon.
As always, if you have any questions, comments, or concerns, please feel free to give us a call.