Energy prices expected to stay at historic highs through 2023

Propane customers urged to lock in supply for coming winter

July 27, 2022

Sweltering midsummer heat across the United States might make it hard to focus on the costs of heating your home this winter, though a recent report from the United States Energy Information Administration (EIA) provides plenty of reasons to do exactly that.

Energy prices, including oil, natural gas, coal and electricity, will remain historically high through 2023, according to the U.S. Energy Information Administration’s Short-Term Energy Outlook. Released in June, the report indicates a variety of contributing factors, including geopolitical uncertainties and tight inventories.

“Although we expect the current upward pressure on energy prices to lessen, high energy prices will likely remain prevalent in the United States this year and next,” said EIA administrator Joe DeCarolis.

In some cases, Michiganders trying to lock in propane contracts now before for the winter are already seeing higher costs than last year.

The Michigan Public Service Commission issued a notice on July 25, urging propane customers to shop now to lock in supply for the upcoming home heating season.

The announcement said: “It’s particularly important for consumers to know their costs in advance as energy prices have risen sharply amid the ongoing fallout from the COVID-19 pandemic and Russia’s war on Ukraine.”

The combination of all of these factors can make consumers a little anxious.

Line 5 remains a steady, reliable source of energy

Bringing the EIA forecast to a local level, propane is a natural gas liquid (NGL) transported through Enbridge Line 5 in the Straits of Mackinac. More than 65% of the Upper Peninsula and half the state rely on Line 5 to meet their propane demands for heating fuel and hot water.

“For decades, this region has been able to rely on Enbridge Line 5 in the Straits of Mackinac to meet its propane and other energy demands,” said Bob Lehto, Enbridge’s operations manager for the northern Michigan area.

“The EIA forecast and other energy notices really underscore the value of having the safe, stable supply of energy that Line 5 provides.”

Across the U.S., approximately 50 million American homes use propane, including 5.8 million that depend on propane as their primary heating source; however, Michigan is the largest propane-using state in the country, according to the Michigan Propane Gas Association (MPGA).

Line 5 remains vital, necessary for the region

A recent report highlighted the importance of Line 5 to the region.

Muse, Stancil & Co. president and market analyst Neil Earnest said that closing Line 5 would result in “shortages in propane for a minimum of several years in the Upper Midwest and Ontario, with consumer prices elevated and volatile.” Earnest is a professional engineer, specializing in providing technical and economic crude market analysis. His report focused on assessing the refiners/producers’ reliance on L5, and their ability to meet NGL and crude oil demands in the face of a L5 closure.

Earnest said Line 5’s transportation of up to 80,000 barrels per day of NGLs “is essential to meeting the demand for propane and butanes in Michigan and Ontario.” The L5 transportation advantages “cannot be otherwise replicated,” enabling “‘just-in-time’ deliveries of propane that would otherwise require a significant investment in (propane) storage” throughout the region.

For information on programs to assist with Michigan energy bills, dial 211 or visit www.mi211.org.