The cost of staying warm remains cool
Low crude oil prices and a relatively mild winter in California
have combined to keep the price of propane moderate for San Benito
County customers who use the fuel to heat their homes or their
water.
”
It’s very advantageous for the users of propane, as we speak,
based on the deteriorating crude oil market,
”
said Jim Dassel, president of Dassel’s Petroleum, which has been
in business since 1939.
”
It’s had a profound effect on users as far as heating costs.
”
The cost of staying warm remains cool
Low crude oil prices and a relatively mild winter in California have combined to keep the price of propane moderate for San Benito County customers who use the fuel to heat their homes or their water.
“It’s very advantageous for the users of propane, as we speak, based on the deteriorating crude oil market,” said Jim Dassel, president of Dassel’s Petroleum, which has been in business since 1939. “It’s had a profound effect on users as far as heating costs.”
In the fall, when crude oil was trading near $125 per barrel, energy suppliers such as Dassel’s were anticipating that energy costs could approach all-time highs this winter. Because propane produced in California predominantly comes from crude oil refining for gasoline, diesel and jet fuel, Dassel’s said in a note to customers at the time that “high crude oil prices will have a direct effect on propane price increases when there is seasonal heating demand this winter.”
Since then, the price of crude has tumbled to under $40 per barrel as of early this week, which has created unusual pricing conditions, according to Dassel, whose propane customers primarily use the fuel to cook or power their water heaters.
“Historically, propane is softer in price in the spring and summer months,” when demand is lower, he said. “This year is extremely unusual in that crude oil has tumbled so far and summer prices were stronger than winter prices. That is very perplexing.”
Even with lower prices, Dassel said his company has seen a 20 to 25 percent reduction in the energy products it sells, including gasoline and diesel fuel.
“People are tightening their belts this winter, putting on that extra sweater or making fewer trips to the grocery store,” he said, noting that the weather has impacted prices to the benefit of customers. “In the West, we’ve had a relatively mild November and December. It’s been wet, but relatively mild in the Central Coast area.”
What the future holds is unclear, though Dassel anticipates a continuation of moderate energy prices if other factors remain steady.
“I wish I had that crystal ball, but I’d say that in the coming months, crude oil would be hovering around where it is today based on the political environment in Washington, D.C. and Sacramento as well as the state of the economy,” he said.
A continued escalation of the Israeli-Palestinian conflict or other turmoil in the Middle East could affect gas prices, according to Dassel.
“If there are no catastrophes, however, we could be looking at fairly soft pricing” for fuel, he said.
In the interim, Dassel’s continues its policy of keeping customer’s propane tanks full, which reduces the amount of trips required and keeps delivery costs down.
“We do our best to serve our accounts on a keep-full basis,” Dassel said. “If the customers help keep our costs down we can help keep their costs down.”
