Analysis
On January 24, 2005, the average residential propane price had no change from last week at $1.23 a gallon. This price was 22 percent higher than last year at this time (see the table at the end of this report). The graph below the text shows the spread in prices from month to month and from this year compared to the previous years. Other states in the Midwest region had higher prices ranging from $1.28 to $1.76 with the region averaging $1.57 per gallon. States adjacent to Nebraska, such as South Dakota, Iowa, and Missouri, had prices of $1.28, $1.28, and $1.53, respectively.
With 15.2 million barrels, the Midwest region inventory level was in the normal range for this time of year. Inventories appear to be adequate for the remainder of the heating season, particularly in the Midwest, where the largest concentrations of propane heating customers are located. If Midwest inventories follow 5-year average trends for the remainder of the heating season, inventories would end the heating season in March at about 9.8 million barrels. This level would be above the 5-year average level which is 8.7 million barrels. The Energy Information Administration projected that inventories would remain above recent year lows even if the region were to experience sustained frigid temperatures lasting several weeks. The year 2001 had the most recent low with 6.1 million barrels at the end of March.
Note: The annual report for the 2003-2004 winter season is available.
Heating Season
The Nebraska Energy Office has participated in the State Heating Oil and Propane Program for four years. During the heating season (October to March), the staff contact 23 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 the Midwest region, Nebraska's average residential propane price was the lowest price each week during the last three heating seasons. 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 be the number of participating states. Since state participation in the program is voluntary, propane prices were not 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.
