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EIA reports propane prices up from last winter

March 27, 2018 By    

Source: U.S. Energy Information Administration, Petroleum Supply Monthly. Click to enlarge.

The U.S. Energy Information Administration (EIA) reported residential propane and heating oil prices are up 11 percent from last winter due to slightly higher crude oil prices, colder winter temperatures and lower fuel inventories.

Prices for U.S. petroleum products, such as propane, tend to follow changes in Brent crude oil spot prices, the most widely used global benchmark crude oil price.

Last winter, Brent crude oil prices averaged $51 per barrel, but have since increased, averaging $64 per barrel from October through February of this year. Because a barrel of oil contains 42 gallons, each dollar of change in the price of oil results in about a 2.4 cent-per-gallon change in the price of petroleum products such as propane, assuming no change in other price components, such as refinery margins or taxes, EIA adds.

Source: U.S. Energy Information Administration, State Heating Oil and Propane Program. Click to enlarge.

Although inventories of propane have been lower in 2018 than 2017, they have still fallen within the range of values experienced in the previous five years, the EIA reports. Total U.S. propane inventory levels were 36.8 million barrels as of March 16 – 17 percent lower than at the same time last year.

On March 18, EIA revised the reported residential propane price data from Oct. 2, 2017, through Dec. 11, 2017, to correct inconsistent reporting by respondents early in the season. The most significant revisions were for the month of October 2017. On average, U.S. residential propane prices were underreported by 4.6 cents per gallon in that month.

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Joe McCarthy

About the Author:

Joe McCarthy was an associate editor at LP Gas Magazine.

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