Propane prices higher than at same time last year

February 3, 2017 By    


Despite most of the country experiencing, on average, a relatively warm winter so far, certain non-weather-related factors are contributing to higher prices for propane and heating oil when compared to the same time last year, the U.S. Energy Information Administration (EIA) reports.

Strong U.S. export demand has upped propane prices, while higher crude oil prices have contributed to higher heating oil prices, EIA says.

Last winter, unseasonably warm temperatures and falling crude oil prices combined to keep expenditures for winter heating fuels lower than historical averages. The latest EIA Short-Term Energy Outlook projects U.S. average heating oil and propane expenditures to increase 36 percent and 23 percent, respectively, compared with last winter, but both are still projected to be lower than average expenditures over the past 10 winters. Heating oil expenditures are expected to be $475 (26 percent) lower than the average expenditures of the previous 10 winters and propane $14 (0.7 percent) lower.

To date, the winter of 2016-17 has been comparatively mild. U.S. average heating degree-days from October to December were 164 (11 percent) fewer than the previous 10-year average for the same period. Barring a significant change in weather patterns from Feb. 2 through March, this winter is expected to have 273 fewer heating degree-days than the 10-year average.

U.S. inventories of winter heating fuels – propane and distillate, which includes heating oil – started the winter of 2016-17 above their five-year averages (what is considered normal for that time of year). Heading into February, inventories of both fuels remain above their five-year averages, but propane inventories are now declining because of higher exports, while distillate inventories are increasing.

In the last week of January, the spot price for Dated Brent crude oil averaged $55 per barrel, $23 per barrel higher than the same time last year. On Jan. 30, the U.S. average residential heating oil price was $2.63 per gallon, 55 cents a gallon higher than at the same time last year. U.S. residential propane prices, which are a function of both crude oil and natural gas prices, have also trended higher, up 37 cents a gallon compared with the same time last year to $2.39 a gallon on Jan. 30.

Increased propane production, combined with an expansion in U.S. infrastructure to export and store propane, resulted in U.S. propane inventories that were higher than the five-year average during 2015 and 2016. However, the growth in propane storage infrastructure has slowed, and the historical average now accounts for years with this greater storage capacity and higher inventory levels. A higher historical average and strong demand for U.S. propane from the global export market have resulted in a recent narrowing of propane inventory levels versus the five-year average.

U.S. propane exports for the past four weeks averaged 1.09 million barrels per day (bpd), 384,000 bpd more than the same period last year. U.S. propane inventories for the week ending Jan. 27 were 58.8 million barrels, just 3.3 million barrels above the five-year average and 16.1 million barrels less than the same time last year.

About the Author:

Brian Richesson is the editor in chief of LP Gas Magazine. Contact him at or 216-706-3748.

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