Regional spotlight: Propane fuels the Midwest

Our quarterly series examines the unique geographical nature of the propane industry. This month, we look at the Midwest.

Look for other regional breakdowns in 2023

January: Propane fuels the Northeast

April: Propane Fuels the South

October: Propane Fuels the West

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About the Midwest

The Midwest region has the highest share of propane-heated homes in the country and is the largest consumer of propane. Its agriculture market is the largest of any region, accounting for 56 percent of the total U.S. ag market in 2021. Four of the top 5 states in propane gallon sales are located in the Midwest: Michigan (No. 2 after California), Illinois (No. 3), Minnesota (No. 4) and Wisconsin (No. 5). Iowa ranks No. 8.

Propane sales

The Midwest region accounted for 38.2 percent of total U.S. propane sales in 2021, a decline from the 39.7 percent share in 2020. Total propane sales in the region decreased from 3.749 billion gallons in 2020 to 3.647 billion gallons in 2021. Residential sales totaled 2.166 billion gallons in 2021, down from 2.265 billion gallons in 2020, due in part to warmer weather that led to a decline in propane demand for space heating. Agriculture sales totaled 523 million gallons, accounting for 14.3 percent of total propane sales in the Midwest. This represented a decline of 64 million gallons relative to 2020, primarily due to a decrease in grain drying demand attributed to the early maturity of the U.S. corn crop.

2021 U.S. retail propane sales by region

2020 sales – 3,749 million gallons
2021 sales – 3,647 million gallons

The weather

Annual heating degree-days in the Midwest decreased by 4.5 percent in 2021 compared to a year earlier.

East North Central: 5,753

West North Central: 6,057

U.S.: 3,937

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Unique to the Midwest

The supply scene: Notable production sites include the Bakken shale formation in North Dakota and the Conway, Kansas, natural gas liquids storage and fractionation hub. The Midwest’s fall harvest season and cold winter weather pose unique supply and distribution challenges for propane marketers operating in the region. A large, wet, late harvest followed closely by a polar vortex caused widespread propane shortages in the region during the 2013-14 winter. Since then, Midwest marketers have increased their bulk storage infrastructure. According to Gray, Gray & Gray’s 2022 Propane Survey, 40 percent of propane retailer respondents in the Midwest say they’re considering a new bulk plant, above the national average of 34 percent.

Energy choice: The Enbridge Line 5 light oil and natural gas liquids pipeline serving Michigan, the surrounding states and Canada is at the center of a heated environmental debate. The state of Michigan has moved to shut down the pipeline, claiming it poses a threat to the Great Lakes, while energy product transporters and manufacturers, including propane stakeholders, have supported litigation to keep it open. Electrification threats are mixed in the Midwest. Indiana, Iowa, Kansas, Missouri, Ohio, North Dakota and South Dakota have enacted energy choice legislation, while localities in Michigan, Minnesota, Illinois and Wisconsin have proposed electrification mandates. Among Midwest respondents to Gray, Gray & Gray’s 2022 Propane Survey, 95 percent say they hold some level of confidence that they would remain viable energy providers given environmental concerns and the political climate.

Notable state and regional associations: Several state associations in the Midwest named new leaders: Michelle Wicker heads the Iowa Propane Gas Association, succeeding Deb Grooms; Becky Schwartz leads the Propane Marketers Association of Kansas, succeeding Greg Noll; Cheryl Lytle has taken the reins of the Wisconsin Propane Gas Association; and Brad Blair now heads the Illinois Propane Gas Association. Collaboration and consensus characterize the Midwest state associations’ response to challenges like declining membership. Steve Ahrens, longtime head of the Missouri Propane Gas Association, assumed leadership of the Arkansas Propane Gas Association. The two states come together with Kansas and Oklahoma during the Mid-States Propane Convention. The Indiana, Michigan and Ohio propane gas associations established the Great Lakes Propane Convention in 2022. The North Central Convention is an opportunity for the Iowa, Minnesota and Wisconsin industries to come together.

Wages: Propane retailers in the Midwest raised employee wages by 12 percent on average, according to LP Gas’ 2022 wage and benefits survey.

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Other sources: Propane Education & Research Council’s Annual Retail Propane Sales Report (2021); U.S. Energy Information Administration