Propane shortages. Skyrocketing prices. Problems ahead?

Across the U.S., propane prices have skyrocketed up 70% since last November. In some places, folks depending on the pressurized gas for home heating are hurting. In Wisconsin, the situation has become so intense that rules limiting how much time truck drivers can work have been lifted for LP truckers. What’s happening? A propane shortage is creating world-wide issues.

Perfect propane storm

Winter is a good time for a storm and, now, converging circumstances have created the perfect winter storm for LP gas users. While the public didn’t see it coming, propane pundits were taking notice as far back as last summer. The July 20, 2020, issue of Successful Farming warned its farmer readers that propane shortages could be expected by fall.

The publication urged farmers to store up as much LP as they could, while prices (at the time) were about 20% lower than a year earlier. The reason? COVID-19 had knocked down a significant amount of the call for gasoline. With less car-fuel being refined, refiners also were cutting back on LP production. Up to a quarter of the nation’s LP comes from refineries, with the balance derived from natural gas. The first element of this perfect storm of a propane shortage then: reduced production of LP.

Adding to the growing propane shortage crisis: Saudi Arabia. The Number Two world oil producing country, second only to the U.S., has cut back production in hopes of pushing up the price of oil. The country’s decision has had a huge impact on the U.S., not so much in terms of what America imports, but how much it exports. We’ll come back to this in a minute.

Restaurants to blame?

A second contributing element – and it’s a “who would have thought” one – was a tremendous increase in the amount of LP used by the restaurant industry. Again, the finger points to COVID-19.

Local and state governments responded to the COVID-19 pandemic by shutting down indoor dining. Restaurateurs – where they could – started putting their customers outside on patios and sidewalks. All well and good – until cool weather started snaking in. To keep those customers coming in, they had to be kept warm. The demand for LP to fire those patio heaters is something to be reckoned with: The typical commercial heater will chew up a five-gallon cylinder of propane in less than ten hours.

Weather woes

Where COVID-19 couldn’t deal a dirty hand, the weather stepped in. The La Niña weather cycle suddenly chilled off Asia. As a result, the demand from Asian countries for U.S.-supplied LP suddenly jacked up. More than half of America’s propane suddenly got a passport to places like Japan, China, and South Korea. But the weather issues didn’t stop in East Asia. It’s visited the Midwest – specifically the U.S. Plains states. Cold weather has created a crisis for families who heat with propane, with Wisconsin’s chills just an example.

Poly-what?

The final blast in the perfect storm of a propane shortage may surprise you. It’s called plastic. LP gas is a necessary ingredient in the production of propylene, the building block of the plastic polypropylene. That particular plastic is used in the making of automotive interiors and packaging. And raising the LP ante? Polypropylene is a critical component in many items of personal protective gear. Whoa! Here comes COVID-19 again!

Much of the world’s supply of propylene is manufactured in East Asia. China’s plastics exports jumped 15% in 2020. But a tell-tale came in the country’s exports in November. Year-over-year plastics exports jumped an alarming 44%. The demand for U.S. propane took yet another hit.

Pain on payment

The results are visible across the country. Since the second week of November 2020, prices for propane have gone up each and every week, according to the U.S. Energy Department. While the pain of paying more for propane is notable, not being able to buy it really hurts. Chuck Woodbury, publisher of this newsletter, reports he’s finding it hard to purchase propane cylinders for his Mr. Heater. Bigger cylinders, as you might find on the front of your travel trailer, are also in high demand, and industry reports it’s having a hard time keeping up with production.

Interestingly, Quartzsite, Arizona, where this writing team is based, isn’t reflecting the rest of the country. The price at most of the local LP retailers is presently at $2.30 a gallon. That’s where it’s been for months on end. Higher than the national average, but certainly not following the curves. For you, the situation may be different. For RVers trapped in the Midwest, you’re in our thoughts.

When will the propane shortage end? Energy pundits are suggesting perhaps when March or April rolls around. The demand from U.S. residents for heat will presumably fall off and so may the shortages and, hopefully, the increasing prices.

By Russ and Tiña De Maris