Propane Spot Markets Soar Again

Both U.S. and Canadian spot markets for propane rocketed to unprecedented levels Thursday as cold temperatures and demand for fuel ran at an all-time high. Transportation constraints continued to plague the industry as marketers operated hand to mouth with limited supplies. Schools were reported closed in at least one state due to a lack of heat and some residential customers were using electric space heaters to stay warm.

Some good news did come as Texas declared a state of emergency, waiving its licensing, permitting, and certification requirements regarding LPG trucks and operators. In addition, the Federal Motor Carrier Safety Administration (FMCSA) issued a regional hours-of-service (HOS) waiver for its Southern Service Center. Expected to follow shortly thereafter was an exemption for the Western Service Center. The Midwest and East had received FMCSA exemptions earlier.

Spots at Conway, Kan., epicenter of the rolling propane transpor­tation nightmare, were at an unbelievable 423.00-500.00 cents/gal. mid-morning Thursday, higher by 250 cents for buyers and 324 cents for sellers from Monday. Low and high deals posted as of press time were at 335.25 and 437.00 cents. Wet barrels at Conway were trading at 436.50-515.00 cents/gal., with trades reported at 370.00 and 440.00 cents.

Mont Belvieu non-LST stood at 152.00-156.00 cents/gal., up 13.75 cents for buyers and 16.625 cents for sellers over the week. Low and high trades were done at 151.25 and 155.00 cents. LST spots, at 153.125-157.125 cents/gal., gained 14.75 cents for buyers and 17.625 cents for sell­ers from Monday, with trades reported at 152.25 and 156.00 cents.

Canada is struggling with its own logistical nightmare. Edmonton spots Thursday had jumped to 199.00-200.25 cents/gal., up 19 cents for buyers and 20 cents for sellers. In the east, Sarnia spot propane was trading at 254.375-254.50 cents/gal., higher by a whopping 21.5 cents for buyers and sellers.

The Energy Information Administration (EIA) reported Jan. 23 that U.S. propane inventories dropped 3.4 MMbbl the week ended Jan. 17. The Midwest gave up 1.3 MMbbl, the Gulf Coast 1.2 MMbbl, and the East Coast 0.5 MMbbl. The balance of the draw was in the West. The latest stock decline placed volumes 42.1%, or 25.6 MMbbl, under last year.