Mild Winter Leads to Lowest U.S. Propane Consumption on Record

Many professionals in the propane industry have characterized the recently ended 2022–2023 winter heating season in the United States as mild. The U.S. Energy Information Administration (EIA) has provided data supporting this assertion.

The EIA estimates that U.S. propane consumption during the winter season averaged 0.986 million barrels per day (bpd), the lowest winter heating season since records were kept in 2010. Warmer-than-average temperatures, especially in the coldest months of December, January, and February, can be blamed for decreased demand for propane in the residential and commercial sectors.

Prices were impacted by the decline in demand for propane over the winter. The average wholesale propane price at the U.S. benchmark location of Mont Belvieu, Texas, was 81 cents per gallon compared to the previous winter’s $1.28 per gallon average.

The effects of lower demand were visible in propane inventories, which reflect the equilibrium between supply, direction, and prices. U.S. propane inventories were 85.5 million barrels at the beginning of the 2022–23 winter heating season in October 2022, up 13.2 million barrels from the same week the year before. Propane inventories increased by 22.0 million barrels by the end of the winter heating season in March 2023, reaching 55.7 million. As of April 28, inventories stood at 58.3 million barrels, continuing the upward trend that began in March.

An exciting result of the decreased demand and lower prices for propane in the U.S. was that U.S. propane prices declined below benchmark hubs in northwest Europe and East Asia. During the winter heating season, U.S. propane exports significantly increased and hit a record high due to this price disparity.