Developments in the Propane Industry in 2023 and Beyond

Propane is becoming a far more important and exciting fuel domestically and internationally. Propane is an excellent source of clean energy, which helps consumers reduce greenhouse gas emissions for a safer and more sustainable future.

FREMONT, CA: Propane is an increasingly exciting and significant fuel, domestically and internationally. Propane, a valuable source of clean energy, allows users to reduce greenhouse gas emissions, contributing to a healthier and a more sustainable environment.

This article analyzes how various propane market trends will likely develop through 2023. U.S. and international demand for propane from many important industries is anticipated to continue driving expansion in the propane industry, despite the impact of inflation and supply chain difficulties on prices.

PROPANE INDUSTRY TRENDS FOR 2023

Forecasters develop industry projections based on past market circumstances and historical trends. Listed below are many forecasted trends for 2023 and how they may affect propane price projections:

U.S. PROPANE PRODUCTION AND EXPORTS: In 2023, the U.S. propane industry may experience production and export difficulties. As a result of a shortage of long-haul truckers and other essential resources, supply concerns and the difficulty of transporting goods are expected to be a concern.

In 2020 and 2021, propane inventories were historically low, negatively affecting supply. A dangerous geopolitical scenario and abnormal weather patterns led to exponentially high energy costs and intense demand in 2022, resulting in a record volume of U.S. propane being shipped to Europe. India and China, two important markets, will likely acquire discounted liquified propane gas (LPG) from Russia beginning in 2023, which may reduce the market for U.S. propane exports.

PROPANE INVENTORIES: The commencement of the conflict between Russia and Ukraine in 2022 triggered global hikes in energy costs across the board. As a result, anticipated propane prices are on the rise as local manufacturers seek to limit inventory and maintain adequate supplies. As of July 2022, national propane inventories were already 12 percent below the five-year average, compounding the problem by combining increased demand with a shrinking supply.

In light of the multiple factors already impacting the propane market and the potential for new developments in global financial difficulties, international conflicts, or a particularly harsh winter, many experts advise suppliers planning for the early winter months of 2023 to carefully manage their inventories.

PRICE OF PROPANE: In recent years, the propane price in the United States has yet to reach distinct price peaks. Early in 2020, propane prices in Mont Belvieu decreased to an all-time low of $0.203 per gallon. Since then, it has momentarily risen before falling again. In late 2021, prices peaked at $1.491 per gallon before falling to $1.123 in early 2022.

The average household will spend $1,668 on propane in 2023 since propane prices are projected to increase by nearly 5 percent. The National Oceanic and Atmospheric Administration predicts that the winter of 2022-2023 will be colder than the winter of 2021-2022 and the winters of the previous decade. This could cause the average to rise.

SUPPLY CHAIN FACTORS: A decline in natural gas and crude oil production is one potential supply chain problem for propane production and exports. Propane is a byproduct of natural gas processing and, sometimes, crude oil. As a result of the travel limitations caused by the COVID-19 pandemic, the global demand for petroleum and natural gas decreased, which inevitably led to a decline in propane output and reserves.

In 2022, people began to return to the workplace, and the global tourism industry began to recover, which, in conjunction with the Russian oil embargoes, increased demand for crude oil and natural gas. Although propane output will continue to rebound alongside these resources, the industry still faces supply chain challenges in the form of a nationwide truck driver shortage, which is expected to affect propane price projections.