Propane Prices Slammed by Hurricane Irma
Just as the energy industry begins to recover from Hurricane Harvey, the largest ever Hurricane to form in the Atlantic Ocean- Hurricane Irma- looks to pose a fresh threat to propane prices. Here at Tankfarm our only true concern is for the safety and welfare of the people affected by Irma. Our thoughts and prayers go out to those already affected in the Caribbean, and to those in the Southeastern US who will face this storm soon.
As the representative of thousands of propane buyers around the country, Tankfarm will take a look at how this historic monster storm could affect propane prices in the US. It may not be what you expect.
Most experts thought that Hurricane Harvey would blast propane prices sky-high given the concentration of energy production facilities shut down by flooding. Prices did rise, but not as much as many thought they would. Why? Ironically, the storm took down several propane export facilities as well as production facilities. The result was a massive drop in exports, resulting in a dramatic build in US propane stocks.
That export slowdown however also caused global prices for LPG (propane to us) to shoot upwards- meaning everyone expects those exports to flow out as soon as possible and in large volumes- which will bring stocks right back down. As a result, prices are steady up again this week another 3 pennies at Mont Belvieu. That’s a big jump and has put propane at its highest level in years.
A big part of that jump is anticipated interruptions from Hurricane Irma, which is set to drive up the Southeastern coast of the US, but could cause trouble in the Gulf too given it’s enormous size (as large as the State of Texas).
Additional stressors on the system could cause prices to jump further- and that would be bad. But the silver lining in Irma’s clouds is that US energy exploration companies are likely pulling as much propane out of the ground as they can to fill US and global demand at dramatically higher prices.
Time will tell, but in the meantime please do what you can for the victims of Harvey and Irma by donating to one of these worthy charities: