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High refinery throughput should result in more propane

July 9, 2018 By and    

U.S. refineries are operating at a high rate of capacity, which should add to propane supplies.

The chart above shows the percentage of total refining capacity being utilized in the United States. Last week, refiners were operating at 97.1 percent of their total available capacity.

The current rate of capacity sets a five-year high. In fact, as the red line above shows, refiners have been operating at five-year highs much of this year.

As of the week ending June 29, refining capacity was at 18.589 million barrels per day (bpd), which is up 282,000 bpd since June of last year. Last year at this time, refiners were only using 94.5 percent of the lower capacity.

Propane is a byproduct of the refining process. Refineries do not decide to make more propane. The process can be tweaked to make more propylene and less fuel-grade propane, but, overall, the higher utilization rates and crude throughput should yield more available fuel-use propane.

Official monthly data from the U.S. Energy Information Administration – available through April – shows an increase in available fuel-use propane.

January through April, refiners made an average 298,000 bpd of fuel-use propane – up 5,000 bpd from last year’s January through April average rate of output. Also, refinery utilization rates were 2.35 percent higher than the same period in 2017.

As of June 29, utilization rates are 2.6 percent higher than last year. Higher utilization rates and more refining capacity should mean propane retailers are finding more propane availability from their refinery sources, which could mean more favorable pricing in local markets as refiners and their brokers look to move higher volumes of propane. However, take a close look at the second chart, which shows rates of production by month.

A retailer may have found plenty of supply, perhaps discounted, from refineries in May and June, but refineries tend to be at much lower production rates during the first quarter of the year when propane retailers typically need the most supply.

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About the Author:

Joelle Harms, an Ohio University E.W. Scripps School of Journalism graduate, creates content for digital properties at North Coast Media, parent company of LP Gas, including e-newsletters, videos, social media accounts and websites. Her specialization in creative writing aids in developing the content voice and message for the company’s online presence.

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