Winter Preview, Playoff Propane
“I didn’t drop my gloves. They were pulled off me.”
- Mike Modano
Playoff Propane
I don’t watch a lot of hockey; but I enjoy the playoffs. My wife comes from a hockey family. Her father “Bampy” played in a town league until he was 45 years old.
My wife met Mike Modano (one of the greatest American-born hockey players) and his father while we were living in Minnesota. “You’ll never guess who I met today!” It was November 1990, I was just learning the wholesale propane business, and the following spring the North Stars were in the Stanley Cup Finals.
There’s something different about the playoffs. The speed and intensity are at another level. This early winter-like weather reminds me that we’re entering the “playoff propane” season.
Here’s a recap of where things stand now.
Propane Supply
U.S. propane supply reached a record high level of 106.1 million barrels, or about 4.5 billion gallons, last week. That’s a lot of propane.
Consider this, though:
- Over 85% is in the Midwest & Gulf Coast.
- Less than 65% is “ready for sale” propane.
Low Propane Price/Higher Electricity Costs
It’s no secret that retail propane demand has been surprisingly strong. I think low propane prices and higher electricity costs are making a difference.
For example, U.S. electricity prices have outpaced the rate of inflation for 3 straight years, while Belvieu prices have fallen about 32% since February. That price dynamic could ice out new heat pump sales and keep heat pump consumption on the bench.
As a leading midstream supplier, Ray Energy recognizes that being prepared for the “playoff propane” season means having what customers need when they need it. So, please be assured that Ray Energy has extra propane supply available for you.
Potential Challenges
You’re probably thinking, if we have record high propane inventory levels and the lowest Belvieu prices in two years, what could go wrong this winter?
Well, the perennial challenge is that more than 80% of domestic “ready for sale” propane supply is in the Midwest and Gulf Coast. It’s true that there are major pipelines that run out from the Kansas and Texas hubs, but their capacity isn’t infinite.
Which means that colder than normal weather could lead to regional challenges.
What Can You Do?
The two best things you can do to help yourself this winter are:
- Schedule ahead. A week to a month is best as it will help dispatchers, supply managers and trucking companies prepare for your needs in terms of drivers, equipment and supply. You can always adjust.
- Let us know ASAP if your propane needs are changing. We’ll come up with a customized plan for you to help guide you through any supply or transportation challenges.
The Skinny
U.S. electricity prices have outpaced the rate of inflation for 3 straight years while Belvieu propane prices have fallen about 32% since February. The combination of low propane prices and higher electricity costs has kept retail demand strong.
The other piece of good news is that the U.S. has record propane inventory. But it’s mostly in the Kansas and Texas storage hubs, which means that we could still face regional challenges. The best thing you can do to prepare is to schedule ahead and let us know ASAP when your propane needs are changing.
As a leading midstream supplier, Ray Energy recognizes that being prepared for “playoff propane” means having what customers need when they need it. So, please be assured that Ray Energy will be there for you.
From all of us at Ray Energy, we hope that you and your family have a very Happy Thanksgiving!
NOTE: The views and opinions expressed herein are solely those of the author, unless attributed to a third-party source, and do not necessarily reflect the views of Ray Energy Corp, its affiliates, or its employees. The information set forth herein has been obtained or derived from sources believed by the author to be reliable. However, the author does not make any representation or warranty, express or implied, as to the information’s accuracy or completeness, nor does the author recommend that the attached information serve as the basis of any buying decision and it has been provided to you solely for informational purposes.
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