Consumer

Propane Heat Customers Saving By Locking In Rates

DENNISON, Minn. (WCCO) ― It is hard to think about winter heating costs in the middle of July. Nevertheless, for homeowners that use propane for heat could end up saving money if they plan ahead.

The national cost of propane is up about 25 percent compared to this time last year. That is almost 50 cents more a gallon.

A few years ago Steve Stenbakken decided he was tired of rising fuel costs.

"I think everybody is. It's getting terrible," said Stenbakken.

Stenbakken's hometown of Dennison, Minnesota has a population of only 150. Every home in town is heated by propane. While he knew he couldn't do a thing about what he pays at the pump, he thought he could lock into what he pays at the tank.

"I think last year was $1.69 (per gallon) that I am paying for this," said Stenbakken.

He is paying roughly 30 cents below the national average for propane. In a 500 gallon tank, that adds up quickly. Steve got the lower rate because he locked in last summer instead of waiting for winter.

Fuel experts said it is kind of like locking into an insurance rate. It could go down after you lock in, but history shows if you lock in now, it usually pays off when winter rolls around.

"Eighty percent of the time it works out to lock in ahead of time," said John Duchscherer of CHS Incorporated, a retail and residential propane distributor.

Duchscherer said a lot of customers are putting less propane in their tanks to save money. Based on the past, Duchscherer thinks a solution may be to set a price now and get more for your money in the long run.

"But those are all historical numbers," cautioned Kuchscherer. "We're not making any prediction on the future. It's very difficult to tell. But if you want to manage your costs, manage your budget on a consumer level, if that's something you're trying to achieve, I would definitely recommend locking in those prices now."

Economists said along with propane, natural gas bills could rise 30 to 50 percent this winter.

(© MMVIII, CBS Broadcasting Inc. All Rights Reserved.)