Rural Canada could be hit the hardest as propane prices soar

Propane Tank Photo by Shutterstock/VDB Photos

Cottagers who rely on a furnace for warmth should prepare for a heating bill hike this winter. While many people have been watching the eye-watering surge in gasoline prices, propane and furnace oil have also experienced price increases.

The price of propane, a byproduct of natural gas processing and oil refining, has jumped by 296 per cent over the last year in North America. According to the U.S. Energy Information Administration (EIA), prices have risen from approximately $0.50 USD per gallon in October 2020 to $1.40 USD per gallon in October 2021.

A predicted shortage in the U.S. could put a strain on some families this winter.

Compared to last year, the EIA said that to warm their homes U.S. citizens will spend 54 per cent more for propane, 43 per cent more for heating oil, 30 per cent more for natural gas, and 6 per cent more for electric heating—and these numbers could be higher if the weather is colder than expected.

“As we have moved beyond what we expect to be the deepest part of the pandemic-related economic downturn, growth in energy demand has generally outpaced growth in supply,” said EIA acting administrator Steve Nalley, in a press release. “These dynamics are raising energy prices around the world.”

Despite a healthy supply of propane, Canada is also feeling the crush of this price increase. Edmonton, Alta. and Sarnia, Ont., Canada’s two propane hubs, are producing necessary amounts of the fuel, yet it’s the industry’s tie to the world market that’s driving up the price at home, said Allan Murphy, senior vice president of government relations for the Canadian Propane Association.

“There’s an increased demand globally, especially in Europe and Asia, and that’s really driving the price up,” Murphy said. “We’re a net exporter of propane in Canada. A lot of people don’t realize that we export about half of the propane we produce into the United States and now into Asia.”

Murphy said he doesn’t expect the price increase to last. “Probably early spring next year we’ll see the price come back down to normal. The challenge for everybody…is that we have to get through the winter.”

Rural communities, like cottage country, may be hit the hardest. “A lot of people in rural areas depend on propane,” Murphy said. “They need energy for transportation more than they would in the city.”

To help combat the price hike, the Canadian Propane Association is lobbying the federal, provincial, and territorial governments to help mitigate the rising energy prices.

“The federal government has a leadership role to play in helping Canadians offset the increased costs for energy,” said Nancy Borden, chair of the Canadian Propane Association, in a press release.

“It must turn its attention to developing policies and programs in conjunction with provinces and territories that will offer relief to Canadians from high energy costs. This could be done through such actions as introducing or enhancing home energy rebates, particularly for lower-carbon fuels such as propane.”

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