Propane has rarely been so expensive this time of year, and prices may have to move higher yet to ensure ample supply for winter, when millions of rural Americans rely on the fuel to heat their homes.
At hubs in Mont Belvieu, Texas, and Conway, Kan., propane futures traded Wednesday at $1.09 and 95 cents a gallon, respectively. Those prices are roughly twice their levels during the past two summers. Spot prices have moved in a similar way.
Retail prices have also risen, though not as sharply. The Energy Information Administration said U.S. households can expect to spend an average of 14% more on propane this winter than they did during last year’s—and significantly more than that if the weather is colder than forecast.
Now is the time of year when many Americans purchase propane for their grills, but those filling up cylinders ahead of Fourth of July cookouts aren’t driving the gains. Prices have risen because of booming exports, February’s freeze and drillers who have eased off since last year’s Covid-19 pandemic lockdown sank energy prices.
Those factors—and a lot of outdoor heating during the pandemic—have drawn down domestic propane inventories to 17% less than a year ago and about 15% below the five-year average.