Iowa farmers are struggling with low commodity prices, but they’re catching a big break right now on propane.
The Energy Information Administration (EIA) reported last week that propane prices in the Midwest have dropped to their lowest level in a decade.
EIA economist Sean Hill says prices across the region are down around 15 percent from a year ago. Possibly the biggest factor is the weather. “The weather, thus far, has been relatively warm compared to normal winter temperatures. It’s been warmer than last winter and also warmer than the 10 year average,” Hill said.
In Iowa, propane prices are averaging around $1 per gallon. Last year at this time, prices were hovering around $1.60 per gallon. Hill says another reason for the decline is crude oil prices are at significantly lower levels compared to the last five years.
“You’ve got lower crude oil and natural gas prices; all of these things lead to lower propane prices as propane is coming from natural gas plants or refineries,” Hills says. Then, there’s the overall supply and demand picture.
“There’s a significant amount of propane out there,” Hill said. “The inventories are at all time highs, inventories of both the U.S. as a whole as well as regionally.” Propane inventories in the Midwest are 11 percent higher than last year, according to the EIA. About 15 percent of Iowa’s households are heated with LP.
Thanks to Mark Dorenkamp, Brownfield Ag News