Slide 16 of 27

As we approach winter, propane prices are lower than they have been for the last several years.

Even with higher demand, the high stocks and lower prices of competing heating fuels should keep propane prices lower during the first half of the winter than last year. The second half of the winter months may be similar to last year’s prices. Under the base case scenario, average residential prices wold be expected to increase seasonally from about 83 cents per gallon in September to a winter peak of 96 cents per gallon in January, averaging 92 cents per gallon, which is about 2 cents lower than last winter.

Should 10 percent colder-than-normal weather occur, propane stocks are projected to end the heating season 9 million barrels lower than in the base case. With cold weather concentrated in the second half of the season, a shorter period exists for incremental supplies to respond to increased demand. Residential prices coul reach a maximum price in January of 102 cents per gallon, then decline to 99 cents by March 1999, which is 6 cents over the base case price. Average prices over the winter would be 4-5 cents per gallon higher than in the base case scenario.

Under the warm winter scenario, U.S. propane stocks would be likely to end the heating season at about 9 million barrels over the base case. Residential prices in this situation would average 87 cents per gallon, or about 4 cents below the base case price and 7 cents below last winter’s average.