ENERGY
FUELS • PROPANE • LUBRICANTS
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Fuel and propane markets
Fuel markets
The fuel markets hovered in the same range for several months, with no breakout up or down until recently, when the hurricanes took some of the largest refineries offline for quite some time. So, why does that increase our price? Of course, part of it is the speculative traders in the markets, but also this is where the actual supply and demand starts to kick in. Obviously, there was enough gas and diesel to keep the country supplied, with the exception of the hurricane areas. The problem is the products are now farther away than you are accustomed to buying them. So, the dominoes start falling and companies are having to look farther away to get the product. This not only leads to higher shipping costs, but human nature automatically raises the price to ensure they will get physical gallons.
Propane markets
A fundamental change has happened to the propane market, and that change is the expansion of the export terminals in the Gulf of Mexico. When the US price drops, propane companies can sell it off-shore for more money. The expansion to the Panama Canal has also allowed larger ships to pass through, saving them a lot of miles going to the Far East. Prices have risen about 30 cents per gallon since early June, and have been on a steady climb since then. A few years ago there was a glut of propane with all of the crude oil drilling, that helped lower the price domestically. But now we have expanded our export capability and are drilling fewer oil wells. That combination has led to lower inventories and higher prices.
What could cause it to drop? A lackluster crop drying season and a warm winter. With the crops being behind the last few years, we are preparing for a busier fall than normal.
Whether the commodity is grain, fuel, or orange juice, it is all traded on an exchange. There is no one person or company that determines what the price will be. So, if you happened to own a large amount of gasoline, let’ s say 100,000 gallons, and you are unable to use it up yourself, you would naturally sell it. At that point you would look for the person who would pay you the most money for it, and if no one offers you the money you need, you lower the price. If it is in high demand, you would wait out for the highest bidder. It is not really much different than going to an auction. When the highest bid is met, the product gets sold.
With our abundant storage, we will be well positioned for fuel supply this fall and winter.
Mid-County Cologne Storage & Blending Facitily
This is an example of an LPG carrier or LPG tanker from
www. conceptdraw. com. This is a gas carrier / gas tanker ship designed for transporting liquefied petroleum gas( LPG) in bulk.
Introducing Rich Smith Rich Smith is Mid-County Energy’ s newest petroleum delivery driver. He’ s also new to Minnesota, as he and his family is originally from Illinois.
“ There’ s a lot to offer here,” said Smith, who moved here in August. Smith doesn’ t have any family ties to Minnesota( his wife is from Montana), but his family vacations here every summer.
Working for Mid-County, Smith is enjoying being part of a rural community, while still living close to the Twin Cities. Smith, his wife, and their two children( ages 8 and 11) currently reside just outside of Chanhassen.
In his spare time, Smith is kept busy with his kids’ sporting events.
“ They are in every sport imaginable,” he said.
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