Higher Propane Prices Signal Rise in Heating Bills for Many Propane has rarely been so expensive this time of year, and prices may have to move higher yet to ensure ample supply for winter, when millions of rural Americans rely on the fuel to heat their homes. At hubs in Mont Belvieu, Texas, and Conway, Kan., propane futures traded Wednesday at $1.09 and 95 cents a gallon, respectively. Those prices are roughly twice their levels during the past two summers. Spot prices have moved in a similar way. Retail prices have also risen, though not as sharply. The Energy Information Administration said U.S. households can expect to spend an average of 14% more on propane this winter than they did during last year’s—and significantly more than that if the weather is colder than forecast. Now is the time of year when many Americans purchase propane for their grills, but those filling up cylinders ahead of Fourth of July cookouts aren’t driving the gains. Prices have risen because of booming exports, February’s freeze and drillers who have eased off since last year’s Covid-19 pandemic lockdown sank energy prices. Those factors—and a lot of outdoor heating during the pandemic—have drawn down domestic propane inventories to 17% less than a year ago and about 15% below the five-year average. Analysts said prices might need to climb higher to discourage foreign buyers. Only then is there likely to be enough in domestic stockpiles to supply a cold winter without price surges or even shortages, they say. “This extremely tight balance, particularly with increased domestic demand from weather, is likely to elicit some reduction in U.S. propane exports through price,” JPMorgan analysts wrote to clients recently, nudging their propane-price forecasts 3.4% higher for the third quarter and up 2.2% in the fourth. Raymond James analysts boosted their price expectations to above $1 for the remainder of 2021. “As these dynamics continue, the U.S. market would project to hit dangerously low propane inventories,” they said. The U.S. became the world’s top exporter of propane in 2013, when the shale-drilling boom unlocked huge new troves of the easily bottled fuel, which is produced alongside natural gas and as a byproduct of oil refining. At the time, most U.S. shipments landed in Latin America. By 2016, the U.S. was sending out more propane than the next four largest exporting nations combined, muscling aside the OPEC members Qatar, Saudi Arabia, Algeria and Nigeria in important Asian markets. Though demand for most fuels fell off a cliff in 2020, outbound cargoes of propane rose 13% to a record, according to the Energy Information Administration. Members of the Organization of the Petroleum Exporting Countries produced less propane when they dialed down oil production, ceding market share to the U.S. Propane surpassed distillate fuel oils, such as diesel, to become the U.S.’s top petroleum export. People all over the world stopped driving and flying during lockdowns, but they didn’t stop cooking or heating their homes, which are the primary uses of propane among consumers from Italy to India. Meanwhile, petrochemical plants in China and other Asian countries kept running because of the complexity of shutting down such operations. “Asia demand might be more inelastic than we thought,” said Rusty Braziel, chief executive of consulting firm RBN Energy LLC. “Prices are high, and unfortunately we’re not seeing the number of cancellations that we would have otherwise expected.” Mr. Braziel, a former propane trader, said many newer petrochemical facilities were built specifically to process propane into propylene, used for plastics, as opposed to older plants that toggle between feedstocks depending on price. In the U.S., Americans grilled, warmed outdoor spaces and heated homes when they would otherwise be out at work, which buoyed domestic demand. Then, in February, the midcontinent froze as far south as Texas, boosting demand while simultaneously choking supply lines with ice. Producers haven’t refilled tanks as they had during the springs and summers before the pandemic. Oil production remains 13% below the record set before the pandemic in November 2019. Meanwhile, Appalachian gas drillers have stuck to the frugal drilling plans they drew up when prices were lower and they were under pressure from shareholders to put profitability ahead of output growth. On Wednesday, the Energy Information Administration reported that propane stocks were fed last week with less than analysts had expected. The petroleum supply district that stretches from Ohio to Oklahoma and up to North Dakota is particularly low on propane. That region burns a lot of propane between autumn, when farmers use it to dry crops, and winter, when the fuel is used to heat rural homes. Even if resurgent natural-gas prices—up 40% since March—spur a revival of drilling in Appalachia, the additional propane is likely to wind up in nearby Northeastern markets, or at an export terminal near Philadelphia to which pipelines run, Mr. Braziel said. “Even if Northeast producers were going gangbusters, it probably wouldn’t go to the midcontinent,” he said. Higher Propane Prices Signal Rise in Heating Bills for Many Propane Prices Are Cooking, Signaling Higher Winter Heating Bills for Many
Maybe some day we'll have an administration that isn't making bank on the anti-fossil fuel advocacy and prices will ease again. I'm doubling my firewood efforts because heat and hot water might be getting quite more expensive than they could be.
I filled 3 propane tanks yesterday and the price was the same as we've been paying for a couple years but I fear the next time the price will be higher and that is why those tanks got filled.
Probably means propane will see $5.50+ / gallon again this winter around here. Last time that happened was winter of 2013/14 (the reason I bought my first pellet stove). Since I only use propane for DHW and as an emergency back up for heat, it won't directly affect me much. Actually with the mini-splits, the boiler will go to 3rd back up. However, a lot of the state's electricity comes from propane, so electric prices will go up too. Unfortunately during the summer the state only posts average heating fuel prices once per month (during winter is is weekly). Here is a comparison from the end of December 2020 to the beginning of June 2021. Fuel oil has gone up, propane is steady, kerosene went down, natural gas is up, bagged pellets are down (slightly - probably a reflection of spring sales to get rid of stock) and cord wood up (slightly). Electricity prices are set twice per year so it's no surprise that it has stayed steady. I'll have to remember to check in another couple of weeks to see how much things have moved. Although, they really won't start moving tuntil cold weather starts setting in, still, the geek in me likes to compare and contrast.
This is why we burn wood at home. We paid $1.849/gallon for propane in April. Needed 38.9 gallons which usually covers our stove use for a year. Our backup heat is central heating burning propane. Small tank won't last long if we needed to use it for any length of time. I just did the math today to figure out what propane and electric heating would cost to replace the wood burner. I have cheap electricity at $0.105/kWh. LP at $1.849/gallon is my latest price to go off of. Assumed a cord of hardwood on average is 22 million BTU and my stove is only 75% efficient means I only get 16.5 million BTUs added heat to my house. I assumed the propane furnace is 90% efficient and the old electric baseboards are 100%. One cord of wood is worth about $366 of propane or $489 of electricity. I think my wood furnace is better than 75%. Which would just increase the equivalent cost of electricity and propane higher. My youngest son was the one asking what the woodpile was worth yesterday. When we hit my goal of 5 cords it will be worth over $2000 to us this winter.
Propane has never been less tham $3.50/gal for me (I've been here since Nov 2013). They filled the tanks on March 2021 and it was $4.10/gal. Note that the average prices I posted above are for just that, averages - which also factors in businesses that use a huge amount and have contracts that control the price. The prices for oil and propane to a home owner are affected by several factors: If you are in a big city (I'm 30 miles away from any large city), if you are near the coast (where the propane is stocked - I'm not anywhere near there), how much you use (if you use less that 1,000 gallons, you pay more), if you can pre-buy (usually not an option for those that don't use at least 500-1,000 gallons).
Yup, time to buckle up, I think we are in for a bumpy ride! Hopefully the wood/pellet heater MFGs are building inventory...likely to be increased demand anyways...and then if we have a nice cold winter...
That’s the name of this site! We are overloaded. 14 cords. I only burn about 4-5 per year. Resistance electric backup at 11 cents per kWh.
bogieb That price of over 4 per gallon is what I paid earlier this year to have a "pug" (100 gallon) tank filled. Those with larger tanks get their propane for less than half of what I paid.
I guess we are lucky here. Propane has been around $1.50 per gallon for 10 years or so. The last time it hit $3 was after 9/11 when gasoline went sky high
We were using propane to heat the bathroom and bedroom up until Dec last winter. When it hit $550 a gal I had them stop coming. At that price I could run a oil filled heater on low when we needed. It was cold but.
Nah.. It's like computer programming, it's easy to miss the semicolon vs colon. ; vs : Easy to overlook the mistake. When you type something, it becomes easy to look past small mistakes. Edit.. We are all biased in some slight manner. If I say something is "A piece of sit".. most everyone's brain does an "autofill". Perhaps we've become used to it due to internet shortcuts and auto-incorrect.
