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EIA expects increased U.S. propane consumption this winter

August 26, 2021 By    
Source: U.S. Energy Information Administration, Short-Term Energy Outlook (STEO)

Source: U.S. Energy Information Administration, Short-Term Energy Outlook (STEO)

In its Short-Term Energy Outlook (STEO), the U.S. Energy Information Administration (EIA) predicts 3.4 percent more U.S. propane consumption this winter compared with last winter, reflecting greater use of propane as a petrochemical feedstock. EIA anticipates below-normal demand for space heating because of a warmer weather forecast. This pattern is especially pronounced in the Midwest, where 42 percent of U.S. homes using propane as a primary space heating fuel are located and where 90 percent of the U.S. corn crop is grown.

U.S. propane consumption is highly seasonal, and two-thirds of the annual consumption occurs during the winter heating season (October through March) because of peak demand for both residential space heating and agricultural grain drying. Agricultural demand for grain drying occurs early in the heating season, usually peaking in October or November, but can vary year to year.

Propane demand for grain drying is expected to decline this year because the U.S. Department of Agriculture forecasts that the U.S. corn crop will mature early (in September or October), allowing producers to leave the crop in the field to dry rather than using propane-fired commercial grain dryers. In the past 10 years, the most propane demand during October occurred in 2013, when Midwest consumption reached 408,000 barrels per day (bpd), 60 percent more than its 10-year average, because the corn harvest occurred late in the season and the grain moisture content was high. November consumption reached a high in 2019, when consumption averaged 381,000 bpd, about 30 percent above the 10-year average, because of a late harvest.

Source: U.S. Energy Information Administration, Short-Term Energy Outlook (STEO)

Source: U.S. Energy Information Administration, Short-Term Energy Outlook (STEO)

Midwest propane demand during the last winter heating season set a new low relative to the 10-year range because of warmer weather. The National Oceanic and Atmospheric Administration’s current forecast calls for normal temperatures this winter in the Midwest, driving EIA’s expectations for higher propane consumption this winter compared with last winter. The Midwest has the highest share of propane-heated homes in the country. Although propane is used as a primary heating fuel in 4.3 percent of all U.S. households, it can exceed 10 percent in some of the northern Midwestern states such as Minnesota and Wisconsin, where heating demand is greatest.

Demand from the petrochemical sector, which also consumes propane as a feedstock, is also projected to rise above last year. As a result, EIA expects U.S. propane consumption for this winter heating season to average 1.1 million bpd, 1.5 percent more than the 10-year average level and 36,000 bpd above last winter.

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