Seven years ago, a frigid winter drove farmers on a propane-buying binge to protect their corn crops, causing a monumental price spike for the gas.
And propane prices are once again on a heater this winter. But this time, it’s for an entirely different reason: the booming popularity of outdoor heating.
Heat Lamp Heaven
The pandemic pushed restaurant dining to the patio last year – a fine change of scenery in the summer months.
But as temps cooled down in the fall, restaurants and homeowners alike pounced on heat lamps to keep their dinner guests comfortable outdoors. And that’s made propane – a primary fuel source for heat lamps – a hot commodity:
- Residential prices clocked in at $2.21 a gallon last week. Home demand hit a five-year high as residences burned through 50% more propane than average over the last four months.
- The futures price in Conway, Kansas, a propane trading hub, has risen to 95 cents per gallon. That’s nearly double the price in November and four times that of last March.
Supply has remained fairly consistent this season, preventing futures prices from nearing the astronomical $5 per gallon seen in the blistering winter of 2014.
Heating The East
Asia’s recently had a hankering for propane too.
A blast of freezing weather in January combined with a gas tanker traffic jam pushed LNG prices to new highs on the continent. That prompted industrial gas buyers in China and South Korea to pass on LNG in favor of propane, which is typically more expensive.
U.S. propane exports in turn reached a record in early January, according to BofA Securities.
Asia’s penchant for propane heightened just after the completion of an expansion project that doubled the shipping capacity of Energy Transfer LP’s export terminal in Texas. Good timing.