Protecting Against Propane Shortages and Peak Prices

In the winter months, the supply and price of propane can be full of surprises. Swinging prices and uncertain supply have the ability to leave propane customers worried about being left in the cold. Homeowners, farm operators and fleet administrators alike can find stability and reassurance this winter when they take advantage of risk management tools, like propane contracting.

As the temperatures drop during this time of the year, the fluctuations in the propane market begin to intensify. To reduce the unpredictability of price, most local and regional propane suppliers are willing to offer contract or payment programs as a measure of assurance.

“To avoid the unpleasant choice of either emptying your wallet on high-priced propane or going without during the cold winter months, home heat propane users should closely review contracting alternatives and discuss various scenarios where a contract program can benefit their situation,”says Brian Clayton, NCC senior energy manager.

Contracts can provide a reasonably steady price for propane year-round. For a nominal fee, some pricing contracts will protect against high prices by applying a cap price. By capping the price, buyers can take advantage of lower rates and avoid paying more should the market price exceed their capped price.

In most communities, propane suppliers offer prepay programs to allow purchasers to buy the gallons they need at one locked-in price. Customers also have the option to participate in a budget-billing program that spread payments throughout the season or the year into equal payments each month.

“Our energy division provides contracting options to give propane buyers more control over price. The variety of our payment programs allows flexibility in choosing a plan that fits the individuals’ lifestyle and budget. It also ensures a dependable supply of energy throughout the year,” says Clayton.

The 2013-2014 winter propane shortages across Indiana and Michigan forced many families to spend days without home heat. Factors such as pipeline failure, the increased need for propane to dry grain after harvest, lower temperatures and increased exports all impacted the propane supply.

“The possibility of supply disruptions is a great reason to have a contract in place. At NCC, we view that as a promise to our customers to meet the supply terms we agreed upon and to ensure a customer has the heat they need, when they need it,” says Clayton.

Those who depend on propane to heat their home or for their business should plan ahead and have a written price and supply agreement with their propane partner. Call NCC today at 1-800-234-0573 to discuss propane-contracting options suitable for you.