Why So Busy?
Many customers have been telling us recently:
“It hasn’t been that cold, but we’re really busy! The funny thing is…we really don’t know what’s going on. We haven’t been able to put our finger on it.”
We’re calling it “The Heat Pump Syndrome.”
We all look at HDD and 10-year averages, but the massive increase in heat pump sales from 2013 to 2022 (especially in cold weather states) has thrown a monkey wrench into our industry’s way of estimating demand.
Last week, a customer from PA agreed with this new theory and said: “We actually designed a program, ADD, which stands for Alternative Degree Days, and we calculate demand differently for customers that have heat pumps.”
What this may mean, going forward, is that demand during the shoulder months may soften and show less propane demand because the heat pumps will work. But get into December, January, February and March with normal or below-normal winter weather and high winds, “Forget about it!”
So, folks with heat pumps in several rooms of their homes or buildings are switching their primary source of heat around during cold and blustery weather because the heat pumps are ineffective. They’re turning their wall thermostats up from 65 degrees to 70 degrees.
And, like magic, propane demand suddenly increases.
What does this mean for me?
What this means for the propane industry, especially in cold-weather states, is that our demand curves may require sharper peaks in the winter months instead of the standard heat curve, which is roughly:
We may need to throw the old model out the window. And how we manage these variable changes in demand will be critical in terms of how we all contract our propane supply going forward.
The Skinny
Many customers in cold-weather states are telling us that they’re much busier than they think they should be. Why is this? One reason could be new tank sets over the past 3 years without much winter weather. Another reason may be that the massive increase in heat pump sales has thrown a monkey wrench into our industry’s way of estimating demand.
How we all manage these variable changes in demand will be critical in terms of how we contract and manage our propane supply going forward.
But one thing is certain; Ray Energy will continue to be your trusted partner and help guide you through these changes as we move forward together.
Happy Holidays from all of us at RAY ENERGY!
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