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2012 2013 Winter Spot Pricing Trends

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Before looking at spot pricing to try and predict winter propane pricing, it is important to have a good grasp of the role of spot pricing in the total propane price. Transportation, distribution, safety, taxes, and tank leasing costs all add onto spot prices to ultimately determine what a consumer pays per gallon of propane.

Looking at the past 10 years of weekly propane spot pricing at Mont Belvieu shows an unmistakable upward trend in pricing. Just like other commodities, especially when compared to oil and energy prices, there have been periods of significant volatility and price increases. Currently, propane prices, while increasing slightly from record lows this past summer are still at nearly 3 year lows, below $1 per gallon. Prices are so much lower than the trend line (shown in red below) would indicate that it is almost inevitable that prices will increase, perhaps as much as 50% in the next few months.

More specifically looking at winter propane prices, in only 1 year out of the past 5 has the average spot price of propane been below $1.16 per gallon. The chart below show the average weekly spot propane price at Mont Belvieu during quarters 4 and 1 (October through March) for the past 10 years. These would seem to indicate that spot pricing will climb $0.40 or more per gallon over the next 6 months from prices at the end of September.