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Cold, supply problems push up propane costs

Retail price jumps 18.5% in Mass.

More than a quarter-million households in New England that rely on propane gas for heating are facing higher bills because frigid temperatures have quickly pushed up prices for the fuel.

In Massachusetts, the retail price of propane has jumped nearly 58 cents per gallon, or about 18.5 percent, to nearly $3.72 since mid-November, according to the US Energy Department. Although only a small share of households heat with propane — less than 3 percent in Massachusetts and roughly 4.5 percent in New England, according to US Census figures — the fuel is often used in rural communities where there are few other choices, and in onetime summer homes that were converted for year-round use.

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In Dighton, a town of about 7,000 in Southeastern Massachusetts, Chris Chandonait said he noticed the price of propane had increased 20 cents a gallon when he received his most recent delivery, shortly after Christmas. He paid about $288 for a 90-gallon delivery, about $20 more than it would have cost a year earlier.

“I’m going to try like hell to go to geothermal this year,” said Chandonait, an insurance programmer.

He has installed new windows and insulation, a more efficient water heater, and a programmable thermostat to help lower his propane use.

Companies have been forced to bring in gas from Europe and Africa.

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“With the new water heater, I hope I can stretch it longer,” he said.

The cold temperatures have affected propane prices in several ways: Rising demand prompted price spikes, while icing on railroad lines has delayed trains that transport much of the fuel to dealers, resulting in shortages in some areas, according to the Propane Gas Association of New England.

“We’ve had to bring in gas from Europe and North Africa,” said Joe Rose, president of the association. “That gas is coming in at 75 to 80 cents higher” than what domestic propane costs.

The situation is even worse in the Midwest, where propane recently hit a record high of $4.95 a gallon, according to Platts, a provider of energy information.

In the Midwest, the fuel is used not only to heat homes and businesses, but to dry crops. Those competing uses have further stressed propane supplies in the region, particularly as wet weather and below- freezing temperatures have pushed up demand, while pipelines have been temporarily shut down or tied up delivering other fuels, such as natural gas.

The situation spurred several politicians from the Midwest to request that the federal transportation department temporarily ease restrictions limiting deliveries of propane by truck.

“Harsh winter storms are threatening the lives and livelihoods of our constituents as many homes and farming operations depend on heat from propane. Without needed supplies, the situation will quickly go from critical to dire,” House Speaker John A. Boehner and several other Ohio congressmen wrote in a letter to the US Department of Transportation last week.

While the price of propane has been “really going crazy” in some places, Samantha Santa Maria, managing editor of North American natural gas at Platts, expects prices to moderate as the weather warms.

Still, Santa Maria acknowledged that propane is vulnerable to additional price spikes if another cold snap hits, particularly in places where the fuel is already in short supply.

As with heating oil, the low prices for natural gas in recent years have shrunk the market for liquid propane, leaving those who still rely on the fuel more vulnerable to shortages and price jumps.

“The thing about propane is it has been pushed out of the market over the last several years,” Santa Maria said. “There just is hardly any [in New England] because you barely use it.”

Ailworth can be reached at eailworth@globe.com. Follow her on Twitter @ailworth.

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