The traditional heating season started with a statewide average price of $2.03 per gallon for propane. On October 6, 2008, the average residential propane price had fallen five cents from the previous month (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 37 cents (or 22 percent) higher than the price at this time last year.
Other states in the Midwest Region had higher prices ranging from $2.08 to $2.68 with the region averaging $2.37 per gallon. States adjacent to Nebraska, such as South Dakota, Iowa, and Missouri, had prices of $2.08, $2.13, and $2.25, respectively.
This heating season begins with a 62-cent rack-to-retail margin. Nebraska retail prices were the lowest of the surveyed states in the region. (Nebraska does not have the lowest wholesale prices of the surveyed states in the region.)
On the supply side, the Midwest Region inventory level was just above the normal range for this time of year with 24.9 million barrels in storage on October 3. The Energy Information Administration estimates 25 million barrels in storage by the end of September to be a benchmark for the Midwest, which means that 25 million barrels in storage is considered adequate for winter demand under most conditions.
Notes: The annual report for the 2007-2008 winter season is available. An archive houses annual reports from previous years.
The Nebraska Energy Office has participated in the State Heating Oil and Propane Program for eight years. 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 the Midwest Region, Nebraska has had the lowest average residential propane price each week. The Energy Information Administration theorizes that this is due to minimal transportation costs since Nebraska's wholesale prices are 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 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.
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.
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.
The prices represent average home heating charge prices for delivery of consumer grade propane, excluding taxes and cash discounts.