US propane gallon sales fall for second straight year

Photo: iStock.com/AlbertPego

Two steps forward and now two steps back.

U.S. retail gallon sales of odorized propane fell for a second straight year in 2016 after enjoying gains in 2013 and 2014, according to the latest data from the American Petroleum Institute (API), finalized in January.

Retailers sold about 8.2 billion gallons of odorized propane in 2016 – a 3.1 percent decline from the previous year, as recorded in API’s 2016 Sales of Natural Gas Liquids and Liquefied Refinery Gases report. The report reflects the latest U.S. propane gallon sales data available to the industry.

Propane’s primary use as a heating fuel also took a hit for the second straight year. Sales in the residential market fell about 5 percent from the previous year to about 4.4 billion gallons.

The 2016 sales declines coincided with a winter warmup. The 2015-16 winter was one of the warmest on record. The 2016 calendar year began in a mild manner, and temperatures didn’t dip much to close the year. The 2016-17 winter was warmer than average in many areas, including the Great Lakes region, the Northeast and the South, according to The Weather Channel.

The internal combustion engine, industrial and agricultural markets also saw sales declines in 2016. The only markets trending upward were commercial at 1.3 percent and sales to retail dispensers at 19.4 percent. The latter category includes sales to bottle fillers and for cylinder exchange programs, campgrounds, hardware stores and other retail outlets.

State-by-state breakdown

California’s propane sales gained about 10 percent in 2016 and the Golden State claimed the top spot for the second straight year with more than 515 million gallons sold.

Michigan was runner-up for the second straight year with about 489 million gallons in sales. Rounding out the top five were Minnesota (379.19 million), Texas (379.17 million) and New York (357.7 million). Wisconsin (354.8 million/sixth) and North Carolina (332.7 million/ninth) fell out of the top five.

Michigan remained a fixture atop the residential sector with about 361 million gallons in sales. The runner-up in residential, Wisconsin, wasn’t even close, falling more than 123 million gallons short of the top spot with about 238 million. California, the new entry in this market, was third (220.5 million), followed by New York (219.7 million) and Minnesota (212.1 million).

California ruled in the commercial sector with about 120 million gallons in sales, followed by Florida (97.4 million), Pennsylvania (89 million), New York (86.5 million) and Virginia (79.7 million). Texas, the previous year’s No. 1, fell out of the top five.

Iowa dominated the agricultural sector again with about 143 million gallons in sales, representing about 17 percent of the total market. Minnesota (87.7 million), North Carolina (67.1 million), California (52.1 million) and Illinois (44.6 million) followed.

Arizona and Washington enjoyed the largest gains from the previous year, at 14.7 percent and 14 percent, respectively, to 94.8 million gallons and 180.4 million gallons. Kentucky and Kansas faced the steepest drops from the previous year, of nearly 25 percent and 23 percent, respectively, to more than 100 million gallons and 99 million gallons.

Total product sales

Sales of all natural gas liquids and liquefied refinery gas totaled 44.5 billion gallons, a near 9 percent fall from 2015, according to the report. Ethane made up about 40 percent of 2016 sales by product type, followed by propane (31.8 percent), butane (20.6 percent) and pentanes plus (8.1 percent).

Propane also suffered overall sales declines, dropping about 25 percent from 2015 to about 14.2 billion gallons in 2016. It was hit hardest in the Gulf Coast region, where sales fell about 43 percent from 2015 to about 5.4 billion gallons. The West Coast, including Alaska and Hawaii, saw the largest regional gain from 2015, of about 29 percent, to 928.7 million gallons.

The gallon sales report, now in its 32nd year, is jointly sponsored by API, the GPA Midstream Association, the National Propane Gas Association and the Propane Education & Research Council (PERC). The data provides a snapshot for the industry, serves as an identifier of key trends driving the market and helps PERC allocate rebate funds back to the states.