DECEMBER TEMPS LAY GROUND FOR STRONGER PROPANE SALES

LAKEWOOD, NJ (Opis Energy Group) -- January 6, 2004 -- When balmy winter temperatures hit the United States two years ago, about the only way some propane distributors avoided massive drops in sales volumes was via acquisitions that expanded their market coverage.

Temperatures dropped off in Winter 2002-2003, and this winter has brought some more welcome temperatures for propane distributors, especially for those like Heritage Propane Partners LP that have a strong presence in the U.S. Southeast.

December data from analysts Weather 2000 show the Southeast to have the most pronounced drop from average temperatures when viewed in terms of Heating Degree Days (HDDs), or the number of degrees per day the daily average temperature is below 65 degrees F. Take a glance at the number of December HDDs for several Southeast markets (plus the percent deviation from the 1992- 2001 average):

-- Atlanta, Ga., 664 HDDs, 14% colder
-- Charlotte, N.C., 751 HDDs, 17% colder
-- Columbia, S.C., 690 HDDs, 22% colder
-- Tampa, Fla., 175 HDDs, 41% colder

And although technically within the PADD III (Gulf Coast) region, Alabama markets like Birmingham and Mobile saw December HDD totals surpass their historical averages by 11% and 17%, respectively.

December HDD totals in Mid-Atlantic markets also surpassed historical averages, but not as dramatically as in the Southeast. New York City saw 6% more HDDs, with a 7% increase recorded in Philadelphia and a 5% increase witnessed in Washington, D.C.

Not surprisingly, residential and wholesale propane prices along the Eastern Seaboard are up from last year, according to the latest weekly data from the Energy Information Administration. For all of PADD I, wholesale propane prices were up by 10.5% and residential prices were up by 12.3% on Dec. 29 compared to a year earlier.

What's in store on the weather front?

Despite Arctic Air ushering in the New Year and pushing temperatures to below zero in 22 states this morning, analysts at Weather 2000 say moderation already has begun.

As is the case with most very intense blasts of Polar/Arctic Air coming down from Canada, the Western United States -- especially the Pacific Northwest and the Rockies -- can get briefly walloped at the start (which they have). But above-normal afternoon highs are expected in those areas as early as tomorrow.

"In the meantime, expect more of the same, with the chilliest air slowly progressing East this week, followed by some reinforcing shots and short-waves next week," Weather 2000 says. "Bitter cold temperatures never last long, so anticipate intra-week undulations . . . across the Upper-Midwest/Plains."

- Brad Addington (baddington@opisnet.com)

Copyright, Oil Price Information Service.



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