(Editor’s note: This is an update to an article that appeared in our Sept. 17 edition).

As reported in the Seminole Producer last week, it’s not too early to be preparing for winter, especially if you heat your home with propane. A September 15 Bloomberg article warns propane customers may be facing one of the most expensive winters since 2014. The article points to a high demand overseas and tighter production as some of the reasons for concern.

Local propane dealer Ken Green doesn’t see that happening. Although customers should be cautious, they should not panic. There is NOT a shortage of propane in the United States. There are limits on the safe transportation of propane from supply points as well as limits on pipeline capacity. This is why is is important to keep your supply of propane up in case there are delivery problems.

Green observes the price of oil has gone up since the election. This has resulted in an increase in cost for all petroleum products, including propane, which had gone up 30 cents in the last 30 days. He agrees prices will most likely go higher before they come down, but he doesn’t think they will reach 2014 levels. Green does suggest propane customers fill their tanks before cold weather creates higher demand, and keep them maintained at a high level, even though he doesn’t see prices getting much higher than they did last year.

As a supplier, he is focused on taking good care of his customers and is very guarded about keeping his storage full. He also places an emphasis on his routes, aware that there is always the potential for icy roads and other challenges during the winter months. He stresses that OLG operates during winter bad spells. The pace may be slower, but their trucks are on the roads even during the weekends when needed.

Sarah McLallen, Vice President, Communications for National Propane Gas Association (NPGA) explains NPGA is a trade association so it does not and cannot comment on price or price forecasts or fluctuations. Leslie Brown Garland, Vice President, State Affairs agrees. If pressed to explain why propane prices are higher, Garland states she usually points out that the price for most consumer goods has increased over the past year, including propane. This can be attributed to lower production in natural gas processing and oil refining, the cost of labor and driver shortages, not to mention the overall cost of running a business.

According to the Bloomberg article, approximately 80 percent of America’s propane is a byproduct of gas processing. Oil refineries typically supply the remaining 20 percent.

Due to the collapse of demand associated the COVID-19 pandemic, there was a historical pullback of global crude oil prices in early 2020, which created an oversupply, which in turn caused a reduction in product. However, demand for propane didn’t drop, so supplies began to tighten as last winter arrived. Adding to the squeeze, the Gulf area refineries were shut down due to Hurricane Ida and had remained shut through Tropical story Nicholas. Although this hindered production, refineries have since reopened.

Approximately 5 percent of U.S. households use propane as their primary heating fuel. It is also used by farmers to dry corn crops as well as being an ingredient in plastics production. Propane markets had been increasing since 2000 as the Shale Oil Revolution took off. Overseas markets began increasing, especially in Asia. U.S. responded by increasing their shipping docks to fill the market. This created increasing competition between the United States and foreign markets.

The COVID-19 glitch is still having an effect, and there are differing theories of what to expect moving forward. The national stockpile is normally built up during the summer in preparation for colder weather. These reserves are currently below the fiveyear average for this time of year.

After the drop in COVID cases earlier this year it looked like there would be increasing demand for petroleum products. However, the current resurgence of the virus has thrown most predictions out the window.

Fortunately, the propane industry is working with their customers to help meet their fuel needs. This includes closely monitoring inventory trends and sharing that information with their customers. The NPGA and state associations communicate frequently with federal and state energy and transportations to keep up with current and expected conditions and use this information to improve deliveries more efficiently. Of course, severe or unexpected disasters require some creative adjustments to ensure delivery is available wherever it is needed most. This is something the propane industry is well prepared for and experience in handling.