US senator asks commission to investigate spike in propane prices

25 January 2014 00:04  [Source: ICIS news]

HOUSTON (ICIS)--With propane prices in parts of the US on Friday still well above $4/gal, a US senator has asked the Federal Trade Commission (FTC) to review the conditions that have led to the natural gas liquid’s (NGL) recent spike.

In a letter to the FTC, Senator Chuck Grassley (Republican-Iowa) has asked the agency to determine if “the price increases are legitimate or manipulated in any way to consumers’ detriment”.

“In recent days, the Midwest spot price of propane at Conway, Kansas, has spiked far above the Gulf Coast spot price at Mont Belvieu, Texas,” Grassley wrote. “I recognise that in the fall, the demand for propane to dry the large, wet corn harvest was significant. In addition, the Midwest has experienced increased demand for propane due to the current cold weather.

“However, the price for propane at Conway has surpassed the spot price in Mont Belvieu by as much as several dollars,” he added. “Many of my constituents have questioned this considerable price differential. Moreover, in just the past few days, the spot price for propane in the Midwest has doubled.”

Propane prices in at the Conway hub have surged above $4/gal, while Mont Belvieu hub prices remain well below $2/gal.

According to the Energy Information Administration (EIA), supplies in the Midwest region, where Conway is located, have fallen dramatically year on year. Propane exports have also risen to record levels, further stripping supplies.

US spot propane prices have been on a steady ascent since mid-2012, when prices fell below 70 cents/gal.

Additional reporting by Bobbie Clark

By: Jeremy Pafford
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