The propane industry recently saw near-record demand in a six- to eight-week time frame. That ultimately resulted in challenges and delivery delays due to pipeline capacity, allocations, outages and unforeseen disruptions in the supply chain at all levels.

Lessons were learned six years ago when we encountered a larger-than-normal demand for propane due to crop drying, and then slipped into a polar vortex. Late 2019 was different, though. The industry went from drying crops to immediately adjusting and refilling new assets that were not in place during the 2013-14 season to ensure supply could support winter demand or a polar vortex if that took place.

We are now sitting in the middle of January still anticipating our first stretch of cold weather. These things are important to understand as we start to paint a high-level supply and demand picture for the Midwest and entire United States.

Fall demand increased local prices as many producers needed to protect and replace gallons stored and sold for their winter supply obligations. Many of these locations have since normalized and been resupplied. As we look at the propane supply for the Midwest and the entire U.S., we notice a few very interesting things. The increased fall demand only put us behind 1 million barrels versus last year in the Midwest. And the total U.S. propane inventory is sitting at a healthy 88.9 million barrels, 12.4 million above the five-year average, and 20.2 million barrels over the same time period last year.

As we take a step back and look at the past and future 30-day weather forecast, we start to wonder if we can have enough cold weather/demand to make room for this summer’s production. We start to find it difficult to make an argument for the U.S. to have any kind of supply shortage any time soon.

It will be very important to watch the inventory numbers, exports and the weather during the next three months to start getting a good handle on what the pricing trends will be this summer and next winter.

Kyle Fecht serves the FS System as GROWMARK’s propane supply manager.