Energy Information Administration provides valuable data

The primary mission of Cost Management Solutions is to provide propane retailers and consumers with critical information and analysis, along with access to hedging tools, allowing them to manage the price risks associated with using propane as an energy source. Without the vast amount of data provided by the Energy Information Administration (EIA), it would be impossible for us to provide our service. We often marvel at the amount of data the EIA provides for every type of energy source – all with a budget that is 0.005 cents of the total taxes U.S. citizens pay to the federal government.

Despite the herculean efforts of the EIA, there always seems to be another piece of information we need, want more frequently or wish was more complete. For example, there currently is frustration stemming from not knowing how much propane inventory is in purity form and how much is still a natural gas liquid mix.

Image courtesy of Cost Management Solutions

The chart above shows propane inventory is not far below where it was last year, but traders are saying too much of that inventory is tied up in Y-grade, which is a mix of natural gas liquids not broken down into purity products that meet the needs of retail, petrochemical and export markets.

Many propane industry professionals feel blindsided now, knowing the tightness in purity propane inventory results from the lack of fractionation capacity. Had there been more warning, propane wholesalers, retailers and consumers could be better positioned in the current escalating price environment.

To its credit, three years ago the EIA foresaw the potential problem this lack of data might cause and searched for resources to eliminate the blind spot. Unfortunately, the resources were not available, a development that was as frustrating to those at the EIA as it is now to those wishing it had the data. The EIA impressed us with the amount of pride it took in what it does, as well as its desire to provide useful, accurate and timely information.

Once again, the EIA is attempting to obtain resources to gather data that would show the amount of consumer grade product available to the propane marketplace. The EIA’s funding has not improved much over the last three years, but it is trying to reallocate resources to provide the market with what it calls “consumer grade or better” propane inventory. Should the EIA be successful, it will take a few years to have enough history available to make the data particularly useful. Still, we wish the EIA success in finding the resources to collect this data. It could be critical in understanding the price environment in coming years.

The EIA also is proposing a new survey that would provide more timely and accurate information on propane production, which would further improve the quality of information across the propane data stream.

Sometimes we may feel our dollars spent on government agencies are not put to good use, or its employees aren’t concerned with doing high-quality work. Our dealings with the EIA suggest it provides the most data it can with the resources it has available, and its employees are truly concerned with and motivated to fulfill the needs and expectations of their customers. In fact, the EIA would be happy to hear your ideas on improving the information stream. Feel free to funnel those ideas through us, if that would be easier, by emailing info@propanecost.com.

Call Cost Management Solutions today for more information about how Client Services can enhance your business at (888) 441-3338 or drop us an email at info@propanecost.com.