Retail Propane Pricing
A personal note:
It’s a somber time in our country. West coast wildfires, gulf coast hurricanes, civil unrest, and the seemingly unending uncertainty surrounding COVID-19. We’re deeply saddened by the news of friends and neighbors who have been affected by these tragedies and we hope that all who read this, especially those who may still be in harm’s way, are kept safe.
How do your prices compare?
We all know that you can’t discuss pricing with competitors, but it’s not taboo or illegal to learn about retail propane prices within your state or your region. In fact, a statistical and analytical agency within the U.S. Dept. of Energy collects (on a confidential basis) and publishes estimated retail propane pricing information throughout the winter months.
Methodology
Using new sampling and weighted estimation methodologies, the Energy Information Agency (EIA) works with State Energy Offices as part of the State Heating Oil and Propane Program (SHOPP) to collect weekly propane prices (propane for heating) via telephone and email surveys from approximately 7,000 retail outlets.
- Estimated prices are averages, exclusive of taxes or high-volume discounts.
- Price estimate data is automatically flagged for verification from respondents if the price variation is greater than 5 percent.
How to estimate prices for today.
The March average for Belvieu propane was about $.22 per gallon lower than current prices, but winter differentials were in place, so it makes sense to add about $.12 to $.20 per gallon to the published numbers below to reach a September estimate for your state.
Next release date.
The next release date will be in two weeks, on Wednesday, October 7, followed by weekly updates throughout the heating season. You can find updated State by State retail price averages here.
What’s happening with propane prices?
During most of April and May, there was an abundance of industry gloom based on concerns that regional propane supply levels would be inadequate heading into this winter due to reduced oil and natural gas production from declining well counts and energy prices that were lower than the cost of production. These factors influenced the supply side while COVID concerns affected the global and domestic demand side.
But here we are now with nearly the highest propane inventory levels in four years!
What happened? What created such a big disconnect between spring projections and fall reality? In my opinion, small but surprising natural gas liquids production gains this summer versus last year, coupled with lower domestic demand, lower export demand, and fewer imports created the inventory environment where propane supply could greatly exceed propane demand.
Propane Price Chart
Weekly Inventory Numbers
Boosted by a healthy .599 mmbbls. build in Central Atlantic/PADD 1B stocks, U.S. propane inventories showed a total build of 1.75 mmbbls. for the week ending September 18, 2020. That brings Central Atlantic (Marcus Hook) stocks to their highest level since July, and national inventory levels to 97.890 mmbbls., about 2 percent ahead of last year and approximately 12 percent ahead of the 5-year average.
PADD 2 (Midwest/Conway) inventories showed a small build of .111 mmbbls. They currently stand at 27.445 mmbbls., roughly even with last year.
PADD 3 (Gulf Coast/Belvieu) inventories showed a build of .902 mmbbls. They currently stand at 55.851 mmbbls., also about even with last year.
The Skinny
It’s important to remember that the state averages for residential propane prices that are published weekly by the EIA are not collected from the entire field of marketers, but are reasonable estimates based on a fairly large sample size. Of course, an “average” price can’t reflect the volumetric cost differences per gallon between a 200-lb. cylinder that’s used sparingly for space heating a room versus a 1,000-gallon underground tank used to heat a 4,500-square-foot home. And, no two marketers have the same costs or footprint in terms of steel that’s out.
The weekly EIA retail propane price report is good information, though, and a useful tool.
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