The propane market is in a state of flux and it bears monitoring as we approach pre-buy season. The inventory of U.S. propane has gone from record highs in November 2016 with more than 100 million barrels to the current inventory of 43 million barrels, a three-year low in propane stocks.
The export market has grown significantly in recent years and is the primary reason why inventories have dropped. Currently, the United States is shipping 42 million gallons of propane to foreign markets per day. The high export volume will likely result in a smaller build in inventory than we have seen the last two summers.
“Right now it’s looking like we could start next winter with about 20 percent less propane in storage if current projections hold true,” says James Greer, vice president of supply and government affairs. “We don’t want to alarm anyone, but if there’s a high demand for crop drying and a winter with more typical (colder) temperatures, there could be some supply shortages.”
Tim Danze, hedging manager, says potential supply issues are just another reason why we should be promoting propane contracting.
“We go above and beyond to honor our contracts,” Danze says. “We take care of our customers with dependable supply. Combine that with the savings customers can see from locking in favorable pricing and propane contracting is really a no-brainer.”