Old Man Winter's Fury
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Coldest January Since the 2010-2011 Winter
The bitterly cold weather pattern we’ve been experiencing, with wave after wave of below-normal temperatures, could make this month the coldest January in 14 years. In fact, temperatures in many U.S. cities have often been colder than Fairbanks, Alaska!
Why? High latitude blocking near Greenland and Alaskan ridging has created a wide trough delivering Siberian air into central and eastern U.S. each time the polar vortex weakens and becomes stretched. We’re receiving the 6th stretched polar vortex of the winter now and expecting a more significant one next week (forecast below).
This picture from the European Centre for Medium Range Weather Forecasts is worth a thousand words:
Cold Winters are a Blessing and a Curse
Propane people love cold weather, but brutally cold temperatures are hard on drivers, trucks and equipment.
They’re also hard on refineries, which often curtail truck sales when they need to recycle their propane internally to fuel operations. And they’re hard on gas plants, which make most of the propane in North America.
Gas Plant Freeze Offs
Not many people know this, but during very cold weather there are often production drops at gas plants because the associated water produced alongside gas at gas wells can freeze and block the flow of gas.
For example, during winter storm “Elliott,” which intensified into a bomb cyclone in December 2022, shale production in the Appalachian Basin dropped by more than 20%.
On and off gas plant production losses this month could easily be in the 15% to 20% range.
Long Truck Lines
Multi-hour truck lines at Selkirk NY and Marcus Hook PA seem like they’re here to stay for a while, as each terminal is delivering over 2 million gallons per day.
Fortunately, last Friday, the Federal Motor Carrier Safety Administration issued a Regional Emergency Declaration covering the entire continental U.S., providing emergency relief from hours of service (HOS) requirements for drivers due to the prolonged cold weather.
The Importance of Ratable Lifting & Planning Ahead
We receive hundreds of railcars a month from multiple supply points across North America on a ratable basis, and the same is true for the pipeline injections that we receive, so please schedule and lift your contracted volume evenly throughout the month to help us manage our supply.
And during challenging times like these, when everything seems to be moving faster than usual, it’s especially important to plan ahead.
The Skinny
January has been exceptionally cold, supply is tight, and we all have our hands full. To the best of my knowledge, though, retail companies haven’t had to short-fill customers, which is good news. It means that we’re all bending but not breaking.
Some more good news: Ray Energy has been working hard to secure spot supply throughout the Eastern U.S. to help you meet increased propane demand, so please let us know how we can help.
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