After consecutive gains in 2013 and 2014, annual U.S. sales of odorized propane fell 9.6 percent to 8.5 billion gallons in 2015, according to the American Petroleum Institute’s (API) latest Sales of Natural Gas Liquids and Liquefied Refinery Gases report, dated Dec. 9, 2016.
Prior to those back-to-back yearly gains, sales nationally and those within the residential sector each had fallen consecutively for five years. A blast of colder temperatures that helped boost 2014 gallon sales made it difficult for 2015 to top, says Mike Sloan, head of ICF’s Gas, NGLs, and Oil Advisory Consulting practice. Moreover, the 2015-16 winter became one of the warmest on record.
“There is no question about it,” Sloan says. “The decline in propane consumption [in 2015] was due to warmer weather and a reduction in grain drying.”
Residential sales in 2015 fell 9.5 percent from the previous year to 4.6 billion gallons. Agricultural sales took the biggest tumble, 22 percent from the previous year, to 866 million gallons. In fact, sales to retail dispensers was the only end-use segment that experienced an uptick in 2015, increasing by less than half a percent.
“The majority of the decline in the ag sector was due to lower demand for crop drying,” Sloan says. “The weather was a little bit warmer; crops got planted a little bit earlier, so the harvest was earlier, and everything was much drier.”
California unseated Michigan for the most statewide propane sales in 2015 with about 469 million gallons. The Golden State reclaimed the top spot for the first time in three years despite dropping 335,000 gallons from the previous year and declining sales volumes for five straight years.
“California has had some very warm weather that has dragged down their sales,” Sloan says. “In this case, they were also still warm, but it’s mostly that the other states combined a warm winter and a low grain drying year.”
Michigan, No. 1 in 2013 and 2014, ranked second in 2015 with about 460 million gallons after sales fell 15 percent from the previous year. North Carolina (393.7 million), Texas (391.4 million) and Wisconsin (389.3 million) rounded out the top five for sales by state.
Michigan, however, led the way again in residential market sales with about 349 million gallons. It was followed by Wisconsin (255.5 million), New York (233.5 million), Minnesota (217.6 million) and Illinois (201.6 million), mirroring the top five in 2014 residential sales.
“Michigan is a big state with a lot of customers in a cold environment. Sales per customer is pretty high,” says Sloan, noting that Michigan had the second-highest number of propane-heated households, behind California, in 2015. “If you’re going to be the leader, you need both of those things.”
Texas went from No. 5 to No. 1 in commercial sales with 94 million gallons. It was followed by California (87.5 million), Pennsylvania (85.6 million), North Carolina (84.6 million) and Florida (83.6 million).
Iowa dominated the agricultural sector with about 138 million gallons in sales, representing 16 percent of the total volume. However, a lackluster crop drying year was evident, as Iowa’s 2015 agricultural sales dropped 27 percent from the previous year and its overall sales fell 20 percent. North Carolina (86.1 million), Minnesota (83.5 million), California (59.4 million) and Illinois (49.9 million) rounded out the top five, which represented 48 percent of total agricultural gallon sales.
All but five states experienced declines in propane gallon sales from the previous year, with Wyoming seeing the largest loss at 29 percent. Connecticut (9.8 percent), Delaware (2 percent), Maine (1.9 percent), Montana (1.8 percent) and Virginia (0.9 percent) enjoyed upticks from 2014.
“You did see some growth in New England and the Northeast,” Sloan says. “That’s an area where propane is a very attractive fuel source. The propane market is continuing to grow, supported by an increasing number of households using propane for home heating.”
Total product sales
In 2015, sales of all natural gas liquids and liquefied refinery gases totaled 48.8 billion gallons – a 1.1 percent decline from the previous year.
Propane made up 18.8 billion gallons, or 38.6 percent, of those 2015 sales – a half-percent decline from the previous year. Half of that total was sold in the Gulf Coast region. Propane was followed by ethane (34.7 percent), butane (18.5 percent) and pentanes plus (8.3 percent).
API, the GPA Midstream Association, the National Propane Gas Association and the Propane Education & Research Council (PERC) sponsor the report. The data provides a snapshot for the propane industry, serves as an identifier of key trends driving the market and helps PERC allocate rebate funds back to the states.