What can we expect from the supply of propane for winter 2023-2024? (2023)

Many have noted that retail propane sellers often approach the upcoming winter by applying the supply plan that would have worked perfectly during the previous winter. The big problem is, of course, that every winter is different and what works well one year may not necessarily work so well the next.

There were many concerns ranging from the war in Ukraine to strong exports and possibly cold temperatures in the United States and around the world this time last year; but a milder winter in the US and Europe helped slow demand, keeping US inventories higher than expected and prices lower throughout the season. U.S. propane supplies for the week of March 3, 2023 were 60 MMbbl (million barrels), after 35.5 MMbbl the previous year and 41.2 MMbbl the year before.

Notably, exports hit a record 1,845 MMbpd (million barrels per day) for the week of February 10. Exports fell to 1,675 MMbpd, 1,571 MMbpd and 1,377 MMbpd respectively in the following three weeks.

BPN asked several supply experts about the chance that we will enter the winter season 2023-2024 much stronger.

Exports will be a key factor to watch

John Powell, senior vice president and head of Crestwood's team of propane industry professionals, believes exports will play a large role in determining supply.

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“As we begin the build season with 60 MMbbl and increased production for 2023, primarily from the Permian [Basin], we should end the build season with sufficient inventory for the 2023-2024 winter season,” said Powell. "The only point to watch is increased exports, particularly to Asia, as demand for chemical raw materials increases as China's economy recovers in the second half of this year."

Powell noted two key drivers for exports: additional demand for chemicals in Asia, which is expected to pick up mainly in the second half of 2023, and about 45 new liquefied petroleum gas (LPG) shipping vessels, which will be added to the global fleet in 2023.

“The U.S. still has increasing export capacity, so we could very well see a year-over-year increase in exports, which would affect the overall starting position of U.S. supply into the winter,” Powell noted.

DD Alexander, President of Global Gas Inc. and chair of the National Propane Gas Association (NPGA) Propane Supply & Logistics Committee, agrees with Powell that it all comes down to exports.

"It's true, we're coming out of the winter with much higher stocks than we had for the past two winters," Alexander said. “However, I will remind you that last year we moved very quickly from the bottom of the five-year average. It's important to remember that we can go back to low stocks just as quickly as we came out of low stocks. Exports is the only thing that will move the needle with respect to stocks. If our exports are high this spring and summer, our stocks will decrease accordingly. If our exports decrease, our stocks will increase accordingly.”

Alexander noted that domestic supply requirements don't move the needle the way exports do. “We see domestic demand having a significant impact on regional supply issues, but not total U.S. inventories. For example, this year we had large inventories nationally, but saw supply constraints in the Western region of the US.”

She noted that while nationwide supplies are important to the price of propane -- especially relative percentage to crude oil -- physical supply constraints and logistical issues dictate local markets.

“At least some of the inventory we see is still in Y-class form in Mont Belvieu,” said Anne Keller, general manager of Midstream Energy Group. “As the fractionators kick in, we may see some spikes in prices as third quarter export markets ramp up lifts to take advantage of what they believe to be seasonal lows. I don't think this winter will be a mild January, so I wouldn't count on high balances."

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“I think we're getting closer to 50 MMbbl before any real builds start this spring,” said Phil Farris, director of wholesale marketing at 3Eight Energy. “The tug-of-war between production and export will be the game to watch. I'm guessing stock levels will be comfortable next fall, but nothing more than that... and price will have some impact. No surprise. I suspect we are entering the winter at the lower end of the five-year range, and next year around this time it will indeed be a problem.

Jeff Thompson, supply consultant at Propane Resources, foresees a brighter future for propane exports as a result of current global events. "Europe will likely continue on the path of divesting energy from Putin," Thompson said.

“Europe will continue to look for efficiency and savings across the energy spectrum. This includes propane. There was panic in Europe last year; this year it is about planning in Europe. I expect Europe to continue to grow as an export market for the US.”

Thompson also believes there is an important market in Asia. “China will be crucial for exports to Asia. If China fails to gain traction this summer and create economic growth, which will be for our winter/Christmas demand, we could see a slight slowdown in Asia in 2023 propane is making a strong run through the building season.

Alexander agrees with Thompson. "If Asia continues to grow and keep its economy open, they have the potential to increase exports from the US. We have additional ships available that will keep cargo shipping competitive and a market that can absorb a lot of US exports."

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For Alexander, a significant number of projects have come online in Asia that can keep propane flowing: “However, what can boost exports can also slow exports. If China gets another extended lockdown or goes into recession, US exports will be the first to stop. Again, it all comes down to exports - either rising or falling - with an unfavorable relationship to inventories."

Production levels and other regional factors to watch

"We could see strong inventory numbers in the Gulf Coast," Thompson said. “The Midwest could be a different story, and we could potentially see weaker inventory numbers as manufacturing makes its way south. With Medford offline, the Midwest will have a harder time showing strong construction numbers going forward. part of U.S. natural gas production is below cost, we could also see less propane production this season than last year.”

"The Midwest is always the challenge," Thompson said. “The infrastructure works in the hope that there will be no hiccups. One hiccup can mess up the whole system. Last winter, the MAPL terminals east of Kearney, Missouri, were assigned to the eastern leg. The weather wasn't even bad. Every winter I worry about what the industry will do when we finally get a 'real' winter."

"This winter was essentially confined to the north and west of the US," Farris said. “Supply, transport and personnel problems were avoided in the south and east. We always see complacency in this industry after warm winters. Higher delivery gaps and higher train fares are likely to delay commitments and delivery plans. Also, the expected change from La Niña to neutral next winter is likely to lead to a different weather pattern.”

“Overall, due to the warmer weather in 2022-2023, there were very few, if any, delivery issues in the central and eastern US,” Powell said. “The only area that experienced supply issues was mainly in the West. High natural gas prices discouraged production of NGL [natural gas liquid], and several production outages and refinery problems required additional rail transportation from larger trading hubs such as Edmonton, Belvieu and Conway to supply the West.”

Powell said those shipments took several weeks to arrive, leaving many users without product for a short period of time. "So, proper contingency planning should be considered in all parts of the country as consumers plan for the 2023-2024 season just as they should every year."

"As we've discussed, exports are the big mover," Alexander stressed. “All local supply problems can be caused by train interruptions, a shortage of truck drivers, the price of natural gas, to name a few. It is important to know where your supply comes from and that you have a diversified supply of propane, railcars and trucks.”

Lessons from the war between Russia and Ukraine in the past year

BPN also asked the experts about lessons and lessons learned from the war between Russia and Ukraine and its impact on US propane.

"The good news is that Europe has had a warmer-than-normal winter and is ending the season with huge stocks of natural gas," Powell said. “So, with Freeport coming back online for LNG [liquefied natural gas] exports, higher than normal stocks of NG [natural gas] and additional LNG receiving points in Europe, this should significantly reduce propane needs in Europe as many residential and commercial customers used propane as fuel instead of the more expensive LNG. Currently, LNG prices in Europe are at or below pre-war prices, which will be good for everyone.”

"I think more US propane will find its way into Europe, and probably will continue to do so for the foreseeable future," Thompson said. “Putin cannot stop the war. If he stops, he dies. This is not so much about the Russian way of life or business. What matters is that Putin maintains and holds on to everything he has: power, wealth and control.”

Thompson believes this is now about a huge strategic blunder that Putin can't get out of. “It looks more like the war is going to be a long, bloody battle that won't solve any problems. The West will continue to supply Ukraine with weapons, because in the grand game of the global geopolitical chess game, a weakened Russia is a good Russia. With the West's desire to see new leadership in Russia, continuing a struggle that weakens Russia and forces regime change is seen as a good thing.”

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According to Thompson, the unknown calculus is China. “How does China benefit and what impact does it have on US-China relations? An angry China may not be too thrilled about buying US propane.

"I'll drift off track with this one...but I'll stay on the pavement and out of the weeds," said Farris. “I don't think this war will last a year from now. Russia cannot break Ukraine's resolve. If they [Ukraine] continue to turn the tide and gain strength, support from the West will increase. Many people want Russia to give in, withdraw and change leadership."

"LPG can run on wheels or on water," Keller said. "Russia will have to pay more for freight than for sales to Poland et al., but they can move it to China and Southeast Asia."

"The Russian invasion of Ukraine made Europe realize that they shouldn't have put all their eggs in one basket, especially Russia's." Alexander said. "I don't think that lesson will be lost on anyone any time soon."

Is now a good time to position propane for 2023-2024?

BPN noted that price tiers provide marketers with a decent margin while selling at a price consumers are used to.

"I would start buying for the winter when crude falls back, probably in the next few months as the dollar and interest rates rise," Keller said. “For 2024-2025 I would definitely look at at least hedge prices. I am not in the camp that believes supply will grow as it did before COVID.”

"Yes, it's a good time to look and start layering," Thompson said. “If crude [oil] goes back to $95-plus, and with lower propane production from the natural gas side this year, traders are less likely to step back from current propane price levels.”

Farris agreed. “The short answer is yes. You always cover your own obligations and eliminate any risk on those litres. But even from a more speculative (the gambler) approach, most retailers in the South have enjoyed great margins at the current cost/retail price level - perhaps the best they've ever had. Are you assuming sales prices stay where they are, lock in your costs and take them to the bank next year or the year after that? Or are you an optimist… and you think everything (costs) will get better… but are you at risk of them getting worse?”

"I always say buy what you sell and sell what you buy," said Alexander. “If you sell fixed prices to your customers, I would definitely cover that. If you're just buying propane to cover some commercial bills, I'd start layering it. It seems that the benefit this coming year far outweighs the harm. One thing is true in our industry: many people remember last winter, but usually no two winters are the same. Make a supply plan and execute it. Just because you had expensive pre-buy or extra physical contract gas doesn't mean you should throw away your supply plan.

Expect the unexpected and stick together

Alexander shared a final thought:

“Every year is different; we never know what we might encounter,” she said. “However, the propane industry is incredibly resilient to the headwinds we face each winter. The NPGA has never been stronger. Make sure you and your suppliers are members of NPGA. NPGA played a big part in getting the drivers waivers and keeping the train cars moving last December. Support the suppliers and NPGA; they support you. Together we are much stronger than individually.”


Is there a shortage of propane in 2023? ›

In 2023, the U.S. propane industry may face challenges in production and exports. Supply issues will likely pose a concern, as will the difficulty of transporting product due to a shortage of long-haul truckers and other necessary resources.

What is the future of propane heating? ›

Availability of Renewable Propane

According to data from U.S. EPA, 4.6 million gallons of renewable propane were produced in 2021. However, within the next few years, 100 million gallons of renewable propane will likely be available with a total potential of 300 million gallons in the next decade.

Is it cheaper to heat with propane or natural gas? ›

While the cost per gallon is less for natural gas, you'll use more of it to heat the same appliances. If you get two times the heat from propane, naturally, you'll use less fuel. In this combined round, propane wins for efficiency and overall cost.

What is the outlook for the propane industry? ›

The global propane market size reached USD 81.40 Billion in 2021 and is expected to register a revenue CAGR of 4.7% during the forecast period.

Is propane going to be in short supply? ›

Propane says there is no propane shortage, but deliveries are delayed.

Is there a propane shortage in America? ›

Many states declare state of emergency as transportation issues and increased demand cause propane shortage. MORE than 30 states across the U.S. have declared a state of emergency as propane transportation has limited the supply, causing prices to spike (Figure).

Is propane heat being phased out? ›

California to phase out gas powered heater by 2030.

Are propane furnaces being phased out? ›

A state board has voted to phase out gas-fueled furnaces and water heaters in California in an effort to reduce its carbon footprint and cut down on pollution. Starting in 2030, all new furnaces and water heaters will have to be electric. “Absolutely it's more efficient,” said Steven Pelle Jr.

Will propane rise or fall? ›

Because propane is heavier than air, the gas will settle to the lowest level possible. Outdoors, this generally isn't a concern, as the gas is usually quickly diluted in the atmosphere and dissipated through wind and other environmental factors.

Is it cheaper to use propane or electric? ›

Propane is cheaper than electric.

According to the U.S. Department of Energy, heating a home in the U.S. with a propane heating system costs far less than heating with an electric system.

What are some disadvantages of propane? ›

Propane heating cons
  • Propane produces fewer BTUs per gallon than oil heating.
  • Propane-burning equipment often costs more to purchase than heating oil-based systems.
  • Propane is combustible in air, so precautions are needed to operate the equipment safely.
Sep 28, 2020

How long will a 500 gallon propane tank last? ›

Generally speaking, a 500-gallon propane tank can last the average American household anywhere from two months to eight months. The number varies depending on elements like: House size: Larger homes require more heating, so they'll consume propane faster than smaller homes.

What industry uses the most propane? ›

1) Manufacturing. Since propane gas is a clean and reliable energy source, many manufacturing facilities use it to power generators and vehicles. Also, petrochemical industries use the gas to manufacture plastics. Companies that manufacture refrigerators also use propane gas as a refrigerant.

Why are U.S. propane prices so high? ›

There's a complex web of causes at play here, but the propane industry attributes the increases mostly to: Geopolitical tensions. Decreased refinery capacity, and. Lower propane inventories leading into 2023 [6, 7].

What is the demand for propane? ›

Market Overview:

The global propane market size reached 174.3 Million Tons in 2022. Looking forward, IMARC Group expects the market to reach 223.1 Million Tons by 2028, exhibiting a growth rate (CAGR) of 3.9% during 2023-2028.

What time of year is propane cheapest? ›

Early fall is a “shoulder” season between these periods of peak demand – meaning it's often the best time to save money on your propane tank refills. Weather is more stable – Sudden cold snaps are common during late autumn and early winter, but they happen less often in the early fall.

Why is propane out of stock? ›

LOS ANGELES (NewsNation Now) — Outdoor dining restrictions caused by the coronavirus pandemic have become a factor linked to propane cylinder shortages and a significant surge in demand.

Why are propane tanks so hard to find? ›

The company says there's a shortage of supply in steel and manufacturing. “The propane industry has experienced shortages in supply just like all industry has, so propane tanks are a little slower to get today than they were a few years ago,” said Mike Hayden, propane manager of Co-Alliance Cooperative.

What state has the most propane? ›

Report: Michigan ranks number one in total U.S. propane sales.

What state uses the most propane? ›

The Midwest has the highest share of propane-heated homes in the country. Although propane is used as a primary heating fuel in 4.3% of all U.S. households, it can exceed 10% in some of the northern Midwestern states such as Minnesota and Wisconsin, where heating demand is greatest.

Where does the US get most of its propane? ›

Most of U.S. propane production is from natural gas processing. In natural gas processing plants, propane enters the plant as a component of the wet natural gas stream from natural gas and/or crude oil wells.

Will propane tanks be banned? ›

42395.1. (a) On and after January 1, 2028, a disposable propane cylinder shall not be sold or offered for sale in this state.

At what temperature is propane useless? ›

Propane is stored within the tank as a liquid, which is then released through a valve as gas. However, when temperatures drop too low within the tank, right around -44 degree Fahrenheit, the propane no longer has the ability to convert into its gaseous form.

Is propane bad for climate change? ›

Is Propane Bad for the Environment? Propane is an environmentally-friendly choice. While it does emit a low level of carbon dioxide, it's relatively clean burning when compared to gas or diesel. It does not emit sulfur dioxide, methane, nitrogen oxides, and other wastes.

What is the best alternative to propane furnace? ›

Biofuels: Biomass, such as wood pellets, can be burned in specialized heating systems to create heat. Geothermal: Geothermal systems use the constant temperature of the earth to heat and cool buildings. Solar: Solar thermal systems use the energy from the sun to heat water or air for a home or business.

Is a propane furnace better than an electric furnace? ›

The average lifespan of a propane furnace is about 20 years, while electric heat pumps last about 14 years. On top of that, propane furnaces retain their efficiency better than electric ones, so they consistently save homeowners money and energy over time.

How long is the life expectancy of a propane furnace? ›

The average life expectancy for a furnace is between 16 and 20 years. If your furnace is getting close to its life expectancy, then it may be time to start shopping around and saving for a replacement.

How toxic is propane? ›

Propane vapor is not toxic, but it is an asphyxiating gas. That means propane will displace the oxygen in your lungs, making it difficult or impossible to breathe if exposed to high concentrations. If you suspect you have inhaled a significant amount of propane, call 911.

Does propane explode or burn? ›

If the pressure level inside the tank level exceeds that at which the safety relief valve can expel it, the propane tank will rupture. If flames or a source of ignition is present, the propane will ignite resulting in an explosion.

Is there a difference between propane and liquid propane? ›

One question we get a lot is “What's the difference between propane and liquid propane?” The simple answer is… nothing. The terms propane and liquid propane are used interchangeably in the grilling industry.

Is it worth switching from electric to propane? ›

Because propane is a more efficient fuel, it costs less to operate. Propane appliances also generally have a longer lifespan than their electric counterparts, saving you both money and peace of mind in the long run.

How much propane does it take to heat a 2000 square foot house? ›

Propane Usage Based on Household Square Footage

1,000 square feet will use an average of 440 gallons on an annual basis. 1,500 square feet will use an average of 670 gallons each year. 2,000 square feet will consume up to 900 gallons on an annual basis.

How can I reduce the cost of propane heating? ›

Ten Tips to Conserve Propane If You Are Running Low
  1. Turn down the thermostat. ...
  2. Use kitchen and bathroom exhaust fans wisely. ...
  3. Keep the fireplace damper closed. ...
  4. Close off rooms you aren't using. ...
  5. Keep heating vents clear. ...
  6. Use your curtains to your advantage. ...
  7. Block any drafts. ...
  8. Winterize your windows.
Dec 7, 2022

What will natural gas demand be in 2023? ›

We forecast that natural gas consumed to generate electricity in the United States during the summer of 2023 (May–September) will average 38 billion cubic feet (Bcf/d), the second most on record behind the 39 Bcf/d recorded last year.

What is the futures price of propane? ›

Propane is expected to trade at 0.67 USD/GAL by the end of this quarter, according to Trading Economics global macro models and analysts expectations. Looking forward, we estimate it to trade at 0.73 in 12 months time.


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