2026: The Year of Propane
The Chinese New Year begins next month with 15 days of festivals and celebrations. Lions and dragons will be dancing in the streets. But it’s “The Year of the Horse” which symbolizes energy, freedom and forward movement.
While most of us won’t be dancing in the streets until the NPGA Expo in Nashville this April we can celebrate freedom of energy choice now, and we can hope that forward movement carries abundant propane supply and low prices right through the New Year.
Here are my top 4 reasons…with a wish and a suggestion…for why 2026 could be nearly perfect for propane resellers:
1. High Inventory
Most people aren’t talking about the future implications of record-high propane inventory levels. But they should be.
Looking at the chart above, it looks like the path of a Le Mans racecar driver that blew the last turn.
That would be bad news for spectators, but the blue line above could be good news for propane resellers, as it may lead to favorable supply and price conditions in 2026.
The chart below shows our current inventory of 95.7 million barrels (33% above the 5-year average), the last two years’ inventory level, and the lowest level in 2024 and 2025:
____________________________________________________________________________________
DATE: JAN. LEVEL: LOW LEVEL: DATE:
1/09/26 95.7 TBD TBD
1/10/25 77.8 43.1 3/21/25
1/12/24 76.3 51.1 3/01/24 ____________________________________________________________________________________
The gap between now and then is so wide that it would require an average drawdown of 5.3 to 5.6 million barrels per week to reach the lowest inventory in the previous two years. That seems unlikely.
It’s more likely that the build period will start with high inventory.
2. Whatever it Takes Pricing
What will natural gas producers do with burgeoning propane supply during the build months if the largest storage facility in the world is fuller than normal?
They may need to increase export demand with “whatever it takes” pricing.
Something similar happened with Edmonton pricing about 9 years ago. This was before the Ridley Island Propane Export Terminal started shipping 3 million gallons per day from British Columbia to Asia.
Strong production and containment issues led to a rare situation where some suppliers were paying customers to take propane.
That’s not going to happen here.
3. Prospects for low crude prices and low propane prices
Up until the current protests in Iran, geopolitical news hasn’t been able to sustain upward influence on energy market prices. That’s telling. It signals that there’s just too much supply floating around the world, and emotional responses to an alarming event haven’t been able to overcome bearish fundamentals. We’ll see if that holds true again.
Bear in mind, a regime change in Iran would likely lead to increased exports unless there’s significant infrastructure damage.
Goldman Sachs’ recently confirmed their crude forecast for 2026 of $52.00/bbl. WTI crude which would equal $.5575/gallon Belvieu propane at 45% (my estimate) value to crude.
Hedging Suggestion, Winter 2026/2027
When propane prices are near historical high price levels it makes sense to protect yourself with hedges that give you upside protection and downside opportunity.
But when prices are near historical low levels as they are now, and there’s limited downside, it makes more sense to protect yourself with a solid foundation that’s built with layers of fixed prices.
4. Clean Heat Standard Legislation on Hold
Clean Heat Standards and Gas Ban legislation in several states have either been paused (pending appeal) or postponed. The work isn’t done, but many thanks go out to the NPGA, state and regional associations, and private companies like Mulhern’s in NY who have skin in the game.
They have been battling vigorously on our behalf for the clean, reliable, affordable and versatile super-energy source we know as propane.
A Wish for Cold Weather
The Vermon Fuel Dealer’s Association keeps track of cold weather.
They’ve recorded 3,554 heating degree days in Montpelier, VT this season. That’s 14% more than last year. Weather forecasts can be mercurial, but it’s nice to see that they’re calling for below average temps to return to the eastern third of the country through late January.
Maybe we’ll have an old-fashioned winter this year.
Which reminds me of a Robert Frost quote, “You can’t get too much winter in the winter.” Obviously, he was a friend of propane.
The Skinny
In 2016, I wrote a blog post titled “Navigation and the Value of Experience.” I used the example of a Norwegian sailor who taught me the importance of experience during a rough sailing trip from the Virgin Islands to Maine.
Naturally, everything started out fine.
In a similar way it looks like 2026 could be a nearly perfect year for propane resellers. Smooth sailing, many reasons to celebrate.
But Ray Energy knows that things can change quickly.
That’s why we have one of the most talented, experienced teams in the propane business working for you. With more strategic assets than ever before, providing you with the supply and pricing solutions you need.
Together, we’ll navigate the stormy seas.
