Why is Propane Price Increasing?

Why is Propane Price Increasing?

The story of our industry right now is the steep rise in propane prices since late
November, as shown in the next graphic. Flat price averages have risen $.3600/cpg in Conway
and over $.3700/cpg at MTB since November 20th. This, despite the 4th warmest November on
record, a December that did not include any anomalous cold for the majority of the country and
a January that has started out warmer than normal for most of the United States with the
exception of the Rocky Mountains in Colorado and Utah, along with Texas, Louisiana and
Arkansas.


Propane’s price movements have been primarily spurred on by record export demand to
Asia, as it has been historically cold there and the Polar Vortex is going to be paying them a visit
for a while, as the coldest air on the planet has been dislodged from its Arctic home and pushed
to the Asian side of the Northern Hemisphere. The United States is the number one producer of
propane in the world and over the past few years we have had so much extra propane prices
have stayed relatively low. Producers have been investing in huge export facilities in the Gulf of
Mexico so they can move the excess propane to Asia. The producers, who saw record losses in
sales in the 2 nd and 3 rd quarter due to Covid19, were licking their chops to sell propane to Asia at
a much higher price than the US. This allowed speculators to drive the domestic price up and
this is where we are. This is just temporary and prices should be coming down as the winter
season ends.

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