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Msg  124433 of 125141  at  11/27/2020 7:52:59 AM  by

MikeyHorse


Propane Is Cheap. Go Ahead, Buy a Patio Heater. Fortunately for those heating outdoor spaces during the Covid-19 pandemic, the U.S. has an ample propane supply

 
Dezember, Ryan.Wall Street Journal (Online); New York, N.Y. [New York, N.Y]25 Nov 2020.
 
 
The coronavirus pandemic has made propane a hot commodity among Americans heating outdoor spaces and hunkering down in Covid cabins. Fortunately for them, the country is flooded with the fuel, and prices have rarely been lower heading into winter.

Spot-market propane prices at the Mont Belvieu, Texas, trading hub have more than doubled since dropping in late March to their lowest level in more than a quarter-century. But at 55 cents a gallon, they are still about one-third lower than the 10-year average for November.

Residential prices, which are cheaper in the middle of the country and more expensive in East Coast markets such as Florida and New England, have lately averaged $1.85 a gallon, the U.S. Energy Information Administration said Wednesday. That is the lowest for this time of year in more than a decade.

It isn't as though there is no demand for propane, which belongs with butane and ethane to a class of hydrocarbons called natural-gas liquids, or NGLs.

The U.S. is exporting about four times as much propane as it shipped abroad in 2013, when the country became the world's top propane exporter . At home, an uptick in residential demand has helped to offset lower use by businesses and farmers, who haven't needed grain-drying equipment much this year because a lack of rain allowed them to let crops dry in the field.

But there is plenty of propane flooding into the market from shale wells in West Texas and Appalachia, where it is produced alongside oil and natural gas. Production has nearly tripled over the past decade and reached record levels this year. These days the U.S. produces about 60% more propane than the entire Middle East, according to S&P Global Platts.

Unusually warm weather last winter left behind big stockpiles when economies were shut down to slow the spread of the coronavirus. Activity plunged at ports and warehouses, where forklifts run on propane. Hotels closed and shut off pool heaters and outdoor fire pits. Manufacturers who use propane to make plastics reduced orders.

Americans stuck at home, however, picked up the slack and began consuming more propane, just as they did with natural gas , lumber and wheat. With temperatures dropping, they and restaurant owners have been buying up bottled propane to keep outdoor spaces comfortable.

Shale drillers cut back this year because of low commodity prices , but propane output has held relatively steady. That is partly because wells in the Permian Basin of West Texas and New Mexico have tended to produce higher ratios of propane as they age, said Jennifer Van Dinter, head of NGL and petrochemical analytics at S&P Global Platts.

"That's given the market a little more comfort in terms of where we are this winter," she said.

The Energy Information Administration forecasts a 5% increase in U.S. consumption this winter, with expectations for colder weather than last year and Americans spending more time at home. About 5% of U.S. households rely on propane for heat, usually in the Northeast and Midwest, particularly in rural areas that natural-gas pipelines don't reach .

Michael Stivala, chief executive of Suburban Propane Partners LP, said people riding out the pandemic in country houses in such places as Vermont, New Hampshire and the Hamptons outside New York City mean there are many propane-fueled homes being lived in a lot more than usual.

"All those homes that were typically a getaway home have become the Covid home," Mr. Stivala said.

The company's Bridgehampton, N.Y., facility, near the eastern end of Long Island, was among its top-performing locations during the normally slow spring and summer, he said. Suburban Propane's fiscal second half, which ended Sept. 26, was the most-profitable ever for the New Jersey firm, which delivers propane to houses and businesses equipped with big storage tanks and to resellers such as filling stations and hardware stores that portion out propane to customers with portable tanks.

Share Your Thoughts

What commodities have you been using more of during the pandemic? Join the conversation below.

Other propane sellers, including Ferrellgas Partners LP and UGI Corp., reported higher residential sales this summer, including through tank-exchange businesses popular with backyard barbecuers.

Tony's Nursery in Larchmont, N.Y., is having trouble keeping in stock enough of the 20-pound tanks, with sales about triple what they would be in a typical year, said the owner, Virginia Rodrigues. Many customers, she said, are buying full tanks without bringing back empties, suggesting a lot of newly purchased grills and patio heaters—and maybe a bit of hoarding.

"It's a lot of demand," she said. "A lot of people are trying to eat outside."

Write to Ryan Dezember at ryan.dezember@wsj.com


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Msg # Subject Author Recs Date Posted
124439 Re: Propane Is Cheap. Go Ahead, Buy a Patio Heater. Fortunately for those heating outdoor spaces during the Covid-19 pandemic, the U.S. has an ample propane supply kxviswan 1 11/27/2020 8:59:55 AM








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