Propane price increases affect businesses


— For Oak Creek business owners Doug Diamond and Scott Wedel, paying more than $2 for a gallon of propane gas is having drastic effects on their pocketbooks.

"Absolutely, this is a burden," Diamond said. "People get upset when I have to raise my prices because I can't absorb everything."

Diamond owns Oak Creek's Black Diamond Tavern. He uses propane gas to cook and heat his restaurant.

"Propane is the lifeline of my restaurant," he said. "If I don't have propane, I don't cook and I can't heat my place."

The recent rise in propane prices is directly related to supply and demand. The price of propane depends on the price of crude oil.

Felipa Villagrana, a customer service representative for Ferrelgas, said winter typically drives prices up, because demand is higher for the fuel.

"Right now, demand is at its highest, so prices are their highest," she said. "We try to work with all of our customers when prices increase."

The rise in propane prices affects many rural Routt County residents who don't have the option to use natural gas, such as Wedel and Diamond.

"I was surprised when I paid $2.20 (a gallon) for propane gas (last Thursday) because propane usually follows gas prices, and gas prices haven't gone up," Wedel said.

Wedel said he paid about $1.99 for a gallon of propane at the end of November.

Wedel is dependent on propane to support his Oak Creek Laundromat and often uses propane when his coal furnace isn't working.

In October, the U.S. Department of Energy's Energy Information Administration predicted propane users would see a 1 percent decrease in propane bills this winter because of increased supply and lack of hurricane-related delivery problems. On average, most national propane users will pay around $1.85 for a gallon of propane gas in 2007, 3.5 percent less than the 2005 average of $1.95 a gallon. The cost of crude oil is expected to remain at about $65 per barrel in 2007.

While prices may have spiked in recent weeks, Diamond said he understands it's only temporary.

"Right now we're experiencing our biggest need (for propane), just like everyone else," he said. "Come summertime, they'll go back down."


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