Propane Exports Put Pressure on Consumers

The Energy Information Administration (EIA) reported recently that exports of domestic propane in September 2013 were at a rate of 335,000 barrels per day (bbs/day). This compares with a rate of 148,000 bbls/day in September 2012. That is a more than 2X increase in just one year.

Combined with increased domestic demand for propane this year, consumers are feeling the pinch. Wholesale prices of propane are up nearly 30 cents in just the last few months, and Midwestern states are contending with an all-out shortage.

So what’s going on? Propane costs more overseas, and drillers in the US are shipping propane out of the country to get more money for their product. This is ironic, given the massive increase in gas drilling in the US which has resulted in a huge increase in propane production. Given the imbalance in pricing however, much of this propane is finding its way to other countries.

It is an interesting study in what might happen to natural gas prices once the US builds out its LNG terminal capacity over the next few years. In the meantime, recent word is that the propane industry wants to see more controls placed on the export of propane. That could be good news for US propane consumers….stay tuned!