The propane industry received positive news to help cushion the blow of a mostly mild winter heating season: back-to-back increases for U.S. odorized gallon sales in a popular annual report.
Sales of odorized propane trended upward for the second straight year in 2014, by 5.8 percent to 9.3 billion gallons, according to the latest data in the American Petroleum Institute’s (API) Sales of Natural Gas Liquids and Liquefied Refinery Gases report.
U.S. gallon sales had declined for five straight years – from more than 10 billion gallons in 2007 to 7.7 billion in 2012 – before finally breaking the fall a year later. The uptick in 2013-14 coincides with a heating season remembered for high crop drying loads in the fall and extreme cold in the winter leading to high demand and contributing to regional supply distribution issues for the industry.
“The impact of the high grain drying load and a very cold December in 2013 got partially pushed into 2014 and increased propane sales in 2014,” says Mike Sloan, principal at ICF International. “And the winter of 2014 was much colder than the previous winter in broad parts of the country.”
Propane’s traditional markets also showed a second straight year of improvement in the report. Like overall odorized sales, the residential market had declined for five straight years before gaining in 2013 and 2014. A 4.7 percent increase in the latest report, which Sloan attributes mainly to the cold weather that year, put residential sales at just more than 5 billion gallons.
The internal combustion engine market, in which the industry sees new opportunities, made a noticeable 10.3 percent jump from 2013, offering 631.8 million gallons in sales. The market includes sales for all non-agricultural propane engines, such as for on-road applications, forklifts, mowers and generators.
Individual state performances
Michigan was the top state for the second straight year in 2014 with 538.6 million gallons in overall sales. It was followed by Minnesota (474.5 million), California (469.1 million), North Carolina (434.2 million) and Wisconsin (428 million). Iowa wasn’t too far behind the top five at 426.6 million gallons.
Also of note, California’s gallon sales fell for the fourth straight year. Sloan attributes the decline to warmer-than-normal winter heating season temperatures.
“They need to get a good, cold winter in order to get a rebound in propane demand,” Sloan says of California.
The report also lists state gallon sales by market segment.
Michigan also held the top spot for residential sales with 420.5 million gallons, followed by Wisconsin (293 million), New York (253 million), Minnesota (250.9 million) and Illinois (219.1 million). New York replaced California in the top five from the previous year.
California, however, was the dominant No. 1 in the commercial sector with 106.3 million gallons in sales. It was followed by North Carolina (93.6 million), Pennsylvania (90 million), Florida (88.2 million) and Texas (88 million). North Carolina was the new entry in the top five, replacing Maine from the previous year.
Iowa and Minnesota repeated for the second straight year as the Nos. 1 and 2 states for agricultural sales, with 189.3 million gallons and 142.9 million, respectively. Other regulars joined them in the top five – North Carolina (99.2 million), Illinois (80.6 million) and California (55.5 million). Together, the five states represented 50.8 percent of the total volume in the sector.
When comparing year-over-year changes for individual states, the most notable increases came from New Hampshire (24 percent), Rhode Island (23.6) and New York (20.5). West Virginia made the largest fall from the previous year at 26 percent.
Sloan says volatility exists in the state numbers due to the methodology and reporting practices in the annual survey. Therefore, he suggests states avoid drawing conclusions about their performance until reviewing data over at least a couple of years.
Sales of natural gas liquids and liquefied refinery gases totaled 49.4 billion gallons in 2014, representing a 5.6 percent increase from the previous year, according to the report. Propane made up the largest portion of those sales by product type, at 38.3 percent, with 18.9 billion gallons, a 1.6 percent decrease from 2013. Propane was followed by ethane (33.1 percent), butane (16.7 percent) and pentanes plus (11.8 percent).
When looking at total propane sales by Petroleum Administration for Defense Districts (PADD), most of the activity in overall consumption took place on the Gulf Coast (PADD 3) with 9.9 billion gallons. It was followed by the Midwest (PADD 2) with 4.2 billion, the East Coast (PADD 1) with 3.3 billion, the West Coast (PADD 5) with 1.1 billion and the Rocky Mountain region (PADD 4) with 463.5 million gallons sold.