Over the past year, there has been some concern over the potential economic impact of unusually high natural gas prices. Although natural gas prices declined from $10 per thousand cubic feet (mcf) in December 2005 to about $6 recently, the Energy Information Administration (EIA) expects prices to return to the unprecedented price levels of last year as we move back into this winter’s heating season. The recent decline reflected recovery of the natural gas industry from the hurricanes of last year, increased supply moving into the U.S. through pipelines and liquefied natural gas terminals, and moving away from last winter’s heating season.

In the past few years, the U.S. economy has grown at a healthy pace in the face of a relentless rise in energy prices. However, almost all analysts agree that continued energy price increases will affect the overall economy and employment, and might affect different sectors of the economy in different ways. This paper examines the possible effects of an energy price rise both at the national and industry level.

SUMMARY
Pursuant to the requirements of the Propane Education and Research Act of 1996 (PERA),1 the Department of Commerce prepared this analysis of changes in propane prices relative to other energy sources. The report presents the relevant price data and concludes that propane prices have not exceeded the threshold established by PERA.