In case you skipped Matt’s article to get to your favorite section of the newsletter, Farmers Union Cooperative of Ossian, IA will be merging into Premier Cooperative on August 1st. I’ve been there a couple of times, and I’m really impressed with their staff, facilities and rolling stock. Their energy division is rock solid, and I am very excited to begin working with them.
What did you think about that last gasp of winter we had a few weeks ago? That was miserable for a couple of days. March came in like a lamb, turned into a lion and went out like a field mouse.
This winter was brutal for propane supply. We had to rely on a lot of propane brought in on railroad cars because of problems with the pipeline and their inability to keep us supplied. Rail propane is more expensive than pipeline propane, so we saw retail prices go up this winter. We came down slightly when the pipelines caught up in March, but the war is keeping prices higher. I know some companies were really struggling to keep their customers supplied this winter, but with the relationships we have nurtured over the years, we kept our propane bulk tanks full and our customers warm and happy.
I’ve had a bunch of people ask me what I think is going to happen with energy prices and the war. We have a lot of crude supply in the U.S., but that doesn’t mean it’s going to stay here. Crude oil and finished products like gasoline and diesel will continue to be exported to the highest bidder. Every day the Strait of Hormuz is closed, prices will continue to go up. As soon as it’s open, we should see energy markets start to collapse.
As far as propane is concerned, there are 73 million barrels in storage as of this week. Last year at this time we had 43 million and the 5-year average is 46 million barrels. Although there is plenty of supply, propane prices have been chasing crude, even though most propane is made from natural gas.
What’s the cure for the high prices? The end of the war. If you’re a farmer and are thinking about contracting your diesel fuel, remember that there is quite a downside to this market if the war ends. If that happens, you’ll be stuck with a high contract price. On the other hand, if the war continues, prices may continue to climb, and you’ll be stuck with even higher prices. I wish I could tell you what the right answer is.
Now that we’re getting nice weather, please remember to call us if you think the hole you’re going to dig for the tree your significant other has been after you to plant for the last three years may be close to your propane line. We have detectors and can mark the path of your propane line from the tank to your house or other buildings. Always call Digger’s Hotline before you put a shovel in the ground. Digger’s will mark the utilities coming into your house but may not mark other lines on your property unless you pay them an additional fee. Please be safe.
Lastly, planting season is just around the corner. Reliable fuel and premium lubricants lay the groundwork for a successful season long before the first seed hits the ground. With Cenex® fuels and lubricants, Premier Cooperative helps you stay prepared for the busy weeks ahead.For more information, contact our sales team at 608‑291‑3254.
I hope you have a fantastic Easter. Thank you for your business.
