After spiking above $5 a gallon in recent weeks, propane prices in Iowa are dropping below $3 a gallon as weather forecasts include a respite from the bone-chilling cold of earlier this week.
The Iowa Weekly Heating Oil and Propane Price report issued Wednesday by the Iowa Department of Agriculture shows propane prices across Iowa fell an additional 12 cents gallon since the agency's regular Monday report.
"Our state average now stands at $3.08 a gallon," said Harold Hommes of the Iowa Department of Agriculture. "Warmer weather forecasts seem to be putting real pressure on wholesale markets. A growing number of retailers are pricing liquid propane gas under the $3 mark."
Propane inventories fell by 2.94 million barrels in the United States, according to the federal Energy Information Administration.
"In normal times this inventory decline might result in stronger wholesale prices for propane, but at current lofty price levels and a friendly near term weather forecast, it appears the retail price retreat trend will likely continue into next week at least," Hommes said.
The U.S. Federal Energy Regulatory Commission has extended an order to Enterprise Product Partners to prioritize shipments of propane along its pipeline running to parts of Midwest and the Northeast after weeks of freezing weather caused shortages.
Enterprise had previously said it was willing to agree to such an extension for its TE Products pipeline after FERC used emergency powers last week for the first time in issuing the original order.
Natural gas futures retreated on the New York Mercantile Exchange Wednesday on speculation that a winter storm in the East this week will give way to milder weather that will reduce demand for the heating fuel.
Natural gas for March delivery slipped 0.2 cents to settle at $4.822 per million British thermal units after rising to $5.028, the highest intraday price this week. Natural gas futures prices are up 14 percent this year, leading to higher heating bills for those depending on the fuel.