Propane shortage?
- Thread starter dlundblad
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I guess it's time to start burning the furniture in the fireplace!
Hello, A propane industry executive on the radio mentioned that this year's grain crops came in later than usual. Huge amounts of propane are used to dry grain crops and that demand was timed more closely to the cold snap we had.
We suffered (are suffering) a short term shortage. Kira
We suffered (are suffering) a short term shortage. Kira
I worked for proflame and at one of the classes i went to they told us that propane is stored underground in tx and that none has been made since the 1920's. Dont know how true that is.
Originally Posted By: Chris142
I worked for proflame and at one of the classes i went to they told us that propane is stored underground in tx and that none has been made since the 1920's. Dont know how true that is.
Helium is stored underground in TX. Propane is a byproduct of refining.
I worked for proflame and at one of the classes i went to they told us that propane is stored underground in tx and that none has been made since the 1920's. Dont know how true that is.
Helium is stored underground in TX. Propane is a byproduct of refining.
Yeah it was my understanding that (in the U.S. at least) there's more propane than we know what to do with. I think that is true about most of it being stored underground in a couple caverns in Oklahoma and Texas.
It's complex. There are many factors that can affect supply and any issue with any one factor will cause a shortage.
Propane is easily stored; that's not the issue.
With most petroleum products we use so much that there is simply not enough storage facilities for anything longer than about maybe 3 months supply. So all the propane available for sale (for example) is probably less than 3 months away from the wellhead.
If there is, for example, a refinery fire anywhere in North America that affects production, that's enough right there to cause a shortage.
Suppliers try to predict use but they can be wrong ... weather could be severe or mild, for example, and cause over or under supply. But that's just one factor ... there are dozens.
It starts right at the wellhead ... oil production is controlled partly by oil companies who own wells, but the majority is owned by tens of thousands of small producers.
Since oil underground is essentially available forever, a small producer will cut his output if the world price falls and has no incentive to over-produce at any time since he knows it will be worth more in one, five, thirty years.
That is why there is separate relationships between the world price and the pump price. As the world price falls, supply falls making pump prices rise.
Propane is part of that so your local price is all about available supply in your local (or regional) market.
Propane is easily stored; that's not the issue.
With most petroleum products we use so much that there is simply not enough storage facilities for anything longer than about maybe 3 months supply. So all the propane available for sale (for example) is probably less than 3 months away from the wellhead.
If there is, for example, a refinery fire anywhere in North America that affects production, that's enough right there to cause a shortage.
Suppliers try to predict use but they can be wrong ... weather could be severe or mild, for example, and cause over or under supply. But that's just one factor ... there are dozens.
It starts right at the wellhead ... oil production is controlled partly by oil companies who own wells, but the majority is owned by tens of thousands of small producers.
Since oil underground is essentially available forever, a small producer will cut his output if the world price falls and has no incentive to over-produce at any time since he knows it will be worth more in one, five, thirty years.
That is why there is separate relationships between the world price and the pump price. As the world price falls, supply falls making pump prices rise.
Propane is part of that so your local price is all about available supply in your local (or regional) market.
I don't know about the stories of these huge underground storage facilities. For one thing most petroleum products begin to rot as soon as they leave the ground. Although propane might not be one of the products affected, it does need to be stored under pressure, which I suspect might not work with natural underground storage.
The one factor that makes me suspicious is the price fluctuations; stable in summer and volatile in winter. With storage as described you would think prices would be (more) stable year-round.
There is a Strategic Reserve of most petroleum products maintained for military use but this is not stored so much as continuously replenished. Also the volume is a very small fraction of what is used in North America on a quarterly basis.
There is another factor ... the 8 or so Regional Markets where for the most part the supply comes from the region itself and products rarely cross into another market. The OP's Chicago market is huge and has robust pipeline infrastructure so it would react quickly to supply and demand.
As a side note, there exists in the US enough pipelines to go around the world. If shortages are severe, those will move product (both raw and refined) across markets but it's a bit of a logistical hassle plus takes time so not something that would happen for a short-term issue.
The one factor that makes me suspicious is the price fluctuations; stable in summer and volatile in winter. With storage as described you would think prices would be (more) stable year-round.
There is a Strategic Reserve of most petroleum products maintained for military use but this is not stored so much as continuously replenished. Also the volume is a very small fraction of what is used in North America on a quarterly basis.
There is another factor ... the 8 or so Regional Markets where for the most part the supply comes from the region itself and products rarely cross into another market. The OP's Chicago market is huge and has robust pipeline infrastructure so it would react quickly to supply and demand.
As a side note, there exists in the US enough pipelines to go around the world. If shortages are severe, those will move product (both raw and refined) across markets but it's a bit of a logistical hassle plus takes time so not something that would happen for a short-term issue.
Originally Posted By: theKman
My price went from $2.79 to $3.25 in one month. Of course, we also used a huge amount this month, so it was really bad timing.
I want to say we are at 3.25 now as well. A family friend said he filled up earlier this month at 2.4x a gallon and thought that was a bit too $$$. lol
My price went from $2.79 to $3.25 in one month. Of course, we also used a huge amount this month, so it was really bad timing.
I want to say we are at 3.25 now as well. A family friend said he filled up earlier this month at 2.4x a gallon and thought that was a bit too $$$. lol
Sounds about right. Locally it is $17 to fill an empty 20 lb tank which was the same as last year.
There's no shortage here. We had our winter fill last week which was only 350 gallons. We have a 1500 gallon underground tank and we get filled twice a year, usually around 300-350 gallons mid-winter and 200-300 gallons mid-summer, depending upon how cold the winter has been.
We contract with our coop every summer when the prices are low, and lock in our price/quantity for the year. This year we locked in 650 gallons for $1.03/gallon. At our current pace we're on track to have an extra 50-100 gallons we can roll over to next year.
I'll never understand why anyone who uses propane doesn't contract during the summer and lock prices in. They double or triple every year about this time.
We contract with our coop every summer when the prices are low, and lock in our price/quantity for the year. This year we locked in 650 gallons for $1.03/gallon. At our current pace we're on track to have an extra 50-100 gallons we can roll over to next year.
I'll never understand why anyone who uses propane doesn't contract during the summer and lock prices in. They double or triple every year about this time.
^ Do you own your tank? I think the gas co owns mine and there's some sort of tank rent included in my gas price. The more people buy, the cheaper it is.
We have various lock-in contracts for propane and heating oil, but every harsh winter it seems like one oil dealer or another is going tango uniform, ripping off customers.
We have various lock-in contracts for propane and heating oil, but every harsh winter it seems like one oil dealer or another is going tango uniform, ripping off customers.
No shortage here. According to my supplier most of our area's propane comes from Bakersfield Calif. unless there is a shortage in the north east, then our locally produced propane is shipped east and our supply comes from Canada.
Originally Posted By: Chris142
I worked for proflame and at one of the classes i went to they told us that propane is stored underground in tx and that none has been made since the 1920's. Dont know how true that is.
It is a byproduct of refining. They do store propane in underground salt dome wells. When the storage tanks get low they flood the wells with water to remove the propane to the tanks. Some refineries have millions of gallons of storage.
I'm sure their is plenty of propane available since the USA has lost a whole bunch of industry that required large amounts of propane. These shortages are probably related to logistics.
I worked for proflame and at one of the classes i went to they told us that propane is stored underground in tx and that none has been made since the 1920's. Dont know how true that is.
It is a byproduct of refining. They do store propane in underground salt dome wells. When the storage tanks get low they flood the wells with water to remove the propane to the tanks. Some refineries have millions of gallons of storage.
I'm sure their is plenty of propane available since the USA has lost a whole bunch of industry that required large amounts of propane. These shortages are probably related to logistics.
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