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Natural Resources Minister Joe Oliver speaks in Toronto on March 22, 2013.DEBORAH BAIC/The Globe and Mail

The federal government has ordered the Competition Bureau and National Energy Board to investigate the sharp run-up in propane prices that has hammered many rural residents and industries that depend on the fuel.

Natural Resources Minister Joe Oliver said Thursday that he is concerned about homeowners who faced soaring prices for propane. But he added that it is up to the provinces to regulate prices if they are concerned that the market is not functioning properly.

"They can't complain about pricing and not regulate pricing," he told reporters. "They can't have it both ways."

In a letter to Mr. Oliver released on Monday, Ontario Energy Minister Chiarelli urged his federal counterpart to act on the price crunch and to work with provinces for a "pan-Canadian response."

In his letter, Mr. Chiarelli noted that propane prices at the Sarnia hub rose by 109 per cent from early October to last Friday, when they hit a record 71.5 cents per litre. A falling dollar would be another factor in higher prices to Canadian consumers because, like most energy products, propane is priced in U.S. dollars.

The Canadian Propane Association said there is plenty of propane supply in North America, but cold weather has caused a spike in demand and there have been some logistical problem that have caused local shortages.

However, exports from the United States to countries other than Canada have also soared.

Propane exports from the United States hit 410,000 barrels per day in November, a four-decade high and double the level of November, 2012.

Mr. Chiarelli's spokesman Matt Whittington said the province looks forward to work with the federal government on its review.

"We are thankful that Mr. Oliver has responded and pleased to see that the federal government is taking Ontario's advice and acting to protect propane consumers," Mr. Whittington said.