If you’ve only been in the propane industry for the last decade, you are experiencing the lowest prices of your career. For those of us who have been around longer than that, we’ve seen these levels before.
That said, the levels we saw earlier this week (Monday) reached levels not seen in 13 years. We’ve compiled a few charts here for you, showing five-year pricing histories at the two main propane trading hubs in the United States: Conway, Kansas which is the Midwestern hub and Mt Belvieu, TX which is the hub that feeds the Southeast and Eastern half of the United States.
The first two charts shows a five-year propane pricing history at both hubs. The third chart shows a 13 year history of Mt Belvieu propane prices in relation to crude oil prices. On that last chart, you can see how propane percentage to crude has dropped in recent years, now down to below 25%, which are at unprecedented levels.
I can’t say this information is going to make you a lot of money today, but the percentage of crude chart is something to stow away. We’ve never seen as much propane as we have in this country right now and the powers of supply and demand have kicked in. But in the back of my mind, crude oil is still the thing that can send this market higher in the blink of an eye (or at the whims of OPEC or terrorists) but it could also be the impetus to send prices lower than they are right now and perhaps lower than we experienced late last week. You can see from the third chart how propane’s historic peaks and valleys have mostly been in lock step to the peaks and valleys of propane, even though the value of propane to crude has widened out.
Those of you who bought fixed price contracts last week bought lower than any dealers have bought since 2002…so congratulations.
Lastly, I will be out of the office the next two days at our annual NGL sales meeting. You can reach me at my email address at firstname.lastname@example.org and I will respond as I am able, but I should have my computer with me the latter half of the day after I arrive at my destination as well as all day tomorrow (Friday, June 12th). I will also keep my Yahoo! IM open, my username is jonmillerngl.