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Twin States See Propane Price Spike

Propane prices are soaring in the Upper Valley as fuel companies struggle to import propane into the region.

In Vermont, the average price of propane has climbed more than 18 percent this month, from $2.860 per gallon in December to $3.386 per gallon in January, according to data released by the Vermont Fuel Price Report, which tracks fuel costs in the state.

The cost is also up compared to this time last year. Propane was averaging $3.056 per gallon in January 2013, a 10 percent difference compared to this month.

The problem, according to propane companies, is not about how much propane is available in the United States. Instead, it’s about where that propane is located, and getting it to where it’s needed.

Icy weather and logistical tangles are creating a bottleneck for propane trying to reach New England — just as temperatures drop and homes need heating fuel the most — and that’s pushing prices upward.

Brad Rostron, the Upper Valley area manager for Twin States heating oil company Cota & Cota, said the rising petroleum product prices come down to “all transportation related issues,” whether they be icing on rail tracks or simply not having enough railcars to meet demand.

Propane is produced as a by-product of natural gas processing and petroleum refining.

“(Production is) still at record levels, to be honest with you,” said Rostron, the Upper Valley area manager for heating oil company Cota & Cota, which serves areas in Vermont and New Hampshire. “It’s just the transportation of it, it’s just bottling everything up.”

And that means the costs, said Cota & Cota Chief Financial Officer Matt Galanes, are getting passed on to the consumer.

“We have to,” Galanes said. “We don’t make anymore when the price is high than when the price is low. We’re feeling it as much as anyone else. ... We’re working hard to make sure our supply stays uninterrupted.”

Compounding the problem are changes to a key Texas-to-New England pipeline owned by TEPPCO Partners, a Texas-based company. The pipeline previously was the largest source of propane to the Northeast, but TEPPCO received approval this year to use the pipeline to send natural gas south, reducing the propane supply to the Northeast by 44 percent, said Joe Rose, president of the Epsom, N.H.-based Propane Gas Association of New England, in an interview with the Concord Monitor .

The industry group released a statement, headlined “There is No Propane Supply Shortage,” earlier this week, addressing consumer concerns about propane’s rising prices.

“What customers are feeling are the results of a strained transportation and infrastructure system that is masquerading as a propane shortage,” the statement said.

In the release, the organization also directed blame at local-level opposition to the construction of more propane storage tanks in their communities. Rose told the Monitor that officials in Maine recently put the brakes on a proposed propane storage tank there.

The Propane Education & Research Council released a similar statement Friday, calling attention to the “extreme weather and transportation issues (that) have made propane hard to come by.

“To be clear, the supply of propane is not a problem. ... The real problem is getting propane from where it’s stored to where it is needed,” it said.

Prices for other types of fuel have remained more stable than propane this winter, according to the Vermont Fuel Price Report. Between December and January, the average price for No. 2 fuel oil increased about 3.1 percent, to $3.856 per gallon. Kerosene went up 3.7 percent, to $4.301.

Industry observers project that propane prices could retreat in February.

“At some point these trains will be able to be caught up and then we will all be fine,” Rose told the Monitor .

Blake Colter, supervisor at the Jiffy Mart locations in Lebanon on Hanover Street and at the Exit 18 truck stop, said demand for propane always increases during the home-heating months. That’s true this year, as well, he said.

Many people can’t afford the minimums that fuel companies charge in order to make a delivery, which Colter said could be in the order of $500. Instead, people will bring tanks down to the truck stop, where a gallon of propane is $3 flat, and get a small supply of propane — maybe 20 gallons, Colter said.

Colter heats his own home with a pellet stove, but he said he is empathetic to folks who are struggling to heat with propane and often are faced with a difficult choice: “Do you want to eat, or do you want to heat your (home?).”

“I think, this year, it’s really hitting the Upper Valley really hard,” he said.

Maggie Cassidy can be reached at mcassidy@vnews.com or 603-727-3220.