Analysis
On February 28, 2011, the average residential propane price had increased 10 cents from the last report to $1.87 per gallon (see the table at the end of this report). The graph below this text shows the spread in prices from month to month and from this year compared to previous years. This week's average price was 7 cents (or 4 percent) higher than the price a year ago.
Other states in the Midwest Region had higher prices ranging from $1.88 to $2.77 per gallon with the region averaging $2.21. States adjacent to Nebraska, such as South Dakota, Iowa, and Missouri, had prices of $1.95, $1.88, and $2.08, respectively.
Since the last report, Nebraska's average wholesale price has jumped 33 cents to $1.62 while the average retail price has increased to $1.87 per gallon. As a result, the rack-to-retail margin has decreased to 25 cents per gallon. Of the surveyed states in the region this week, Nebraska had the lowest average retail price but not the lowest average wholesale price.
On the supply side, the Midwest Region inventory level was just below the bottom boundary of the normal range for this time of year with 9.6 million barrels in storage on February 25.
Notes: The annual report for the 2009-2010 winter season is available. An archive houses annual reports from previous years.
Heating Season
The Nebraska Energy Office has participated in the State Heating Oil and Propane Program for ten winter seasons. During the heating season (October to March), the staff contact companies each week who supply propane to Nebraska, collect Monday's retail price, and submit the data to the Energy Information Administration. The Energy Information Administration calculates the average price shown in the table below.
In previous years, Nebraska had the lowest average residential propane price each week in the Midwest Region. The Energy Information Administration theorized that this was due to minimal transportation costs since Nebraska's wholesale prices were not the lowest in the region each week. Another reason would have been the number of participating states. Since state participation in the program is voluntary, propane prices have not been surveyed in each state in the Midwest Region. Kansas and Oklahoma might also have had low prices--possibly lower than Nebraska's because the two states are closer to production, refinery, and storage areas.
Off Season
During the off season (April through September), the Nebraska Energy Office staff continue to contact the same suppliers who were contacted during the heating season. Staff contact suppliers once a month instead of once a week since the price of propane is usually not as volatile during the off season. The Nebraska Energy Office staff calculate the average price, shown in the table below, from the suppliers' retail prices on the first Monday of the month.
State Heating Oil and Propane Program
The Energy Information Administration, the independent statistical and analytical agency within the U.S. Department of Energy, conducts the State Heating Oil and Propane Program from October to March--the heating season--each year. The Energy Information Administration collects prices for the program each week from participating states and calculates a state average price, a regional average price, and a national average price which can be seen in the report Residential Propane Prices by Region and State.
Midwest Region
For statistical purposes, the Energy Information Administration defines the Midwest Region to include the states of Iowa, Illinois, Indiana, Kansas, Kentucky, Michigan, Minnesota, Missouri, Nebraska, North Dakota, Ohio, Oklahoma, South Dakota, Tennessee, and Wisconsin.
Price Explanation
The prices represent average home heating charge prices for delivery of consumer grade propane, excluding taxes and cash discounts.