Good Morning. Wanted to get this note out before hitting the road on my final day of Midwest travel. I must say the state of Indiana has some hidden beauty I did not believe existed in the Midwest…rolling hills and spectacular trees captured in all of their splendor. I have attached a few photos I have snapped along my journey this week. I always try to stop and smell the roses a bit, regardless of what I see or where I am. After all, we only get one shot at this life, right?
It looks like things are turning cold not just in the Midwest but possibly the majority of the eastern two-thirds of the country. I found this interesting weather commentary that I believe you’ll want to read:
If that wasn’t enough of a tease to get you to read that, I will add the author invoked the holy grail of winters; 1978-1979. Yeah, give it a read.
Also, the United States is now the world’s largest producer of oil. All Hail the Shale!
We’re all interested in what this will mean for pricing next year as that will be the first full year where Targa’s exporting capabilities are at full capacity and the Scio, Ohio product will be on the market in full force (we are responsible for marketing 75% of that, which will likely allow me to help many of you). Between this formation and the Bakken, folks are wondering if we will be awash in propane.
I am not on board with that yet. The Cochin product is leaving the market, there are now more pipelines and methods to take product from Conway to Belvieu. Quite a bit of the Scio product is going to be railed to the Northeast where supply has always been a challenge and where the netbacks are greatest. Exports are at all-time highs and show no signs of subsiding. If propane prices do fall a good deal, petchem demand will kick in. I also believe prices can only fall so far because the overseas export netbacks will begin to take precedence.
It’s just a much different world for us in propane, more global than it ever has been and while we may be amply stocked, it doesn’t mean we’re going to see prices down into the $.70’s anytime soon…not unless crude oil goes down with it.
Lastly, thanks to all of you for reading these messages. I enjoy putting them together, I appreciate the feedback some of you provide and let me know how I can best serve your needs.