Why It’s a Great Idea to Lock in Propane


As we approach the contracting, pre-pay, budget season for propane, it’s a good idea to look at why proactive options are a great way to take the guesswork out of your future LP needs. By contracting/locking in your future propane needs for the upcoming heating or crop drying season, you have the peace of mind of knowing you have the propane you will need for the fall and winter of 2018/2019.

Over the last five years, we have seen extreme volatility in propane prices. Remember when prices were over $5.00 a gallon? Did you know inventories in season with heavy usage periods have caused prices to spike and supplies to be stretched during the extreme cold periods of winter–I think the weather folks use the term “Polar Vortex” instead of Alberta Clipper now? Just last winter, inventories of LP in the upper Midwest were well below the 5 year average mark, which caused some propane suppliers to go to forced allocation/maximum delivery gallons of 200 gallons per stop. Because CHS Larsen Co-op Supports propane contracting, pre-pay, budget, and summer fill programs so heavily, we lock-in propane gallons during the summer with our suppliers so you, our customers, don’t need to worry come fall and winter.

Most of our competitors will buy propane gallons in season on the open market, which could be a problem if non-contracted gallons are scarce and expensive. At CHS Larsen Co-op, we lock-in these needed gallons by purchasing futures propane contracts for in-season heating and crop drying needs. As one of our customers, when you lock-in propane gallons you have the advantage of knowing you will have the propane you need, when you need it, at the agreed upon price–no hassle, no worries, no guesswork of wondering how high propane prices will go when the cold arrives.

Last year we saw propane prices surge past $2.00 a gallon during the extended cold weather periods in January and early February.  CHS Larsen Co-op customers that locked in propane at a substantially lower price during the summer contracting period of 2017 did not have to be concerned about surging LP prices or supply/inventory issues. Looking forward at the 2018/2019 heating and crop drying season, we once again face lower propane inventories at this point in time due to heavy and growing exporting of US product to expanding world markets. This demand is not just heating needs but mainly for manufacturing needs as propane is a major component of many finished products. This scenario, just like last year, leads us to believe we will see cost of propane jump up during the cold months/heating season. The best way to combat this future price increase is to contract your needed gallons this summer and to take advantage of the CHS Larsen summer fill program so you do not have to worry about your heating needs for this winter.

CHS Larsen Co-op is just a phone call away. We are here to take the uncertainty and guesswork away in helping you lock-in your propane needs.

By Todd Plath, Certified Energy Specialist

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