EIA: Propane prices steady amid higher inventories

The residential price of propane was slightly above the previous five-year average to start the winter heating season. Since then, the U.S. Energy Information Administration (EIA) reports, its price has remained flat.

Over the first 10 months of 2022, U.S. propane exports averaged 1.4 million barrels per day (bpd), the most on record, EIA says. Global demand for propane is elevated because of increasing demand for propane as a petrochemical feedstock in propane dehydrogenation units and flexible feedstock crackers, as well as increased exports to Europe for winter heating.

Despite record exports, more production and less heating consumption have led to U.S. propane inventories remaining above the previous five-year average, contributing to minimal price changes.

As of Jan. 20, U.S. inventories were 75.6 million barrels, up 40 percent from the same week last year and above the previous five-year average, EIA reports. The Gulf Coast, where most U.S. petrochemical consumption and export capacity for propane are located, accounts for about 47 percent of propane storage capacity. Propane inventories in the Gulf Coast are 30 percent, or 10.2 million barrels, above the previous five-year average. In the Midwest, where about 8 percent of U.S. households use propane as the primary space heating fuel, inventories are about 27 percent, or 4.6 million barrels, above the previous five-year average.

Warmer-than-normal weather has reduced heating demand. According to the latest weekly data from the National Oceanic and Atmospheric Administration (NOAA), the U.S. has experienced 9 percent fewer heating degree-days than normal, measured from July 1, 2022, through Jan. 21, 2023, the EIA points out. NOAA expects warm weather to continue in February and March.

The average U.S. residential price of propane was $2.71 per gallon as of Jan. 23, 51 cents a gallon lower than at the same time last year and 5 cents a gallon higher than the week of Oct. 3, 2022. The price was $3.42 a gallon in the Northeast and $2.30 a gallon in the Midwest.