Propane users watching their money go up in flames

With propane prices rising, chef Patrick Owens expects to spend around $2,000 a month keeping the stoves burning at Langdon's in Mount Pleasant. Here he uses propane to burn alcohol off a dish.

Those who heat their homes and run businesses with propane will be singed this winter by surging prices, as a pipeline explosion and a shortage of imports put a crimp in Southeast supplies.

A gallon of propane from the Mont Belvieu terminal in Texas, the source of much of South Carolina's propane, sold for $1.52 at wholesale in November, 60 percent more than a year earlier.

For Mark Hess, who uses propane to run two of his three coin laundries in Moncks Corner, those figures represent profits going up in smoke. When he bought the businesses from his father in 1997, Hess paid 69 cents for a gallon of the fuel; now, he is burning up close to $2.50 a gallon.

"It's been going on for two months and it's killing me," he said. "It's threatening to shut my business."

Propane prices also are pinching margins at a host of area restaurants where chefs prefer an open flame to an electric burner. Langdon's in Mount Pleasant is paying close to $2,000 a month for propane, according to owner and executive chef Patrick Owens.

"It's more than the power bill now, I can tell you that," he said. "You try to conserve as much as possible without micro-managing — yelling at someone for leaving an empty burner on or something. It's kind of like taxes: You just got to deal with it."

The propane market started heating up in early November when an explosion in Mississippi shut down a 12-inch pipeline, the only propane vein pumping into South Carolina. At the same time, the flow of propane into U.S. ports slowed to a trickle.

David Hinton, a petroleum analyst with the federal Energy Information Administration, said stronger currencies in Europe and Asia siphoned off big shipments that otherwise would have landed here.

"A lot of it was just arbitrage," he said, referring to traders' practice of taking advantage of small price discrepancies between markets in different parts of the world. "The margin being offered here just wasn't as much," he explained.

U.S. propane stocks are now 14 percent lower than they were a year ago, and average retail prices for the fuel are 25 percent higher, according to the Energy Information Administration.

The market is even tighter in South Carolina. AmeriGas Partners LP, one of the country's largest propane distributors, is charging its local customers almost twice as much as it was a year ago, District Manager Dick Ricklefs said. When Ricklefs joined the company in 1989, he was selling propane for about 80 cents per gallon. Now, some homeowners on his delivery routes are paying close to $3.50 per gallon.

"I'm starting to hear it from my commercial customers," Ricklefs said. "For a lot of people there's just no way to budget for these huge increases."

AmeriGas Chief Executive Officer Eugene Bissell said the prices are spurring conservation among his 1.3 million national customers.

"For us, it's definitely not a good thing," he said.

Almost half of U.S. households fire up propane grills, and in the Charleston area about 8,300 homes burn the fuel for heat, according to the U.S. Census Bureau.

Berkeley Electric Cooperative, which sells propane to almost 4,000 area homes and businesses, said it is charging four times more for the fuel than it did when it got into the gas business eight years ago. Since the pipeline explosion in November, Berkeley Electric propane has been trucked to its tanks from Mississippi, according to Vice President of Public Relations and Marketing Eddie McKnight.

"We hear about it all the time," McKnight said. "Every time I go to fill up the propane tank for my grill, I complain, too."

And the propane market will likely get hotter before it cools off. Prices for the fuel move inversely to temperatures, so the colder that it gets in coming months, the more consumers are likely to pay.

"Weather is always the wild card," Hinton said. "And we really don't have much of a safety net this year."