Winter arrived early in many parts of the U.S. this year, with frigid temperatures and, in some places, snow measured in feet, not inches. Propane demand for heating is up, but surprisingly, inventories are high, prices are low and the outlook for the rest of the winter looks good. And propane just dodged a hail of bullets when Congress legislated away what had been a likely rail strike. Is it too early for propane marketeers to be dancing in the aisles about what looks like a safe outlook for winter season supplies? That’s the big question. Because spring is still more than three months away. And it’s a fact that sustained cold weather, logistical challenges and other factors can wreak havoc with any propane market. In today’s RBN blog, we examine the current state of the U.S. propane market, why things have improved so dramatically and, of course, what could still go wrong.
You could have made a pretty penny in Vegas if six months ago you’d bet that U.S. propane inventories would end November at almost 90 MMbbl. (Can you really bet on propane inventories in Vegas?) Anyway, that’s exactly where we ended up, with propane stocks nearly 25% above the same week in 2021. The market price of propane tells the rest of the story. Last year at this time propane was trading at about 62% of WTI crude oil. It had been 82% in October 2021. But Mont Belvieu propane currently sits at a paltry 39% of WTI. It was even lower last week.
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How did we get here? It’s all about production growth. We said early in the year that we were going to need a bigger boat to balance the market with all of the production growth coming out of the Permian. After all, almost two-thirds of U.S. propane production moves to the export market. Well, it looks like we don’t have enough boats due to an ongoing logjam at the Panama Canal. That means more propane stays home in U.S. inventories, which are close to 5-year highs heading into the peak winter demand season. That’s why the U.S. propane market is relatively comfortable — there doesn’t appear to be much risk of supply shortfalls in the coming weeks. But let’s not get cocky. We are not out of the woods yet.
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About the song
“Safety Dance” was written by Ivan Doroschuk and appears as the second song on side one of Men Without Hats’ debut studio album, Rhythm of Youth. It was released as a single in the U.S. in March 1983 and went to #1 on the Billboard Dance chart and #3 on the Hot 100 Singles chart. Ivan Doroschuk, the band’s songwriter and lead singer, has said that “Safety Dance” was written as “a protest against bouncers prohibiting pogoing to ’80s new wave music in clubs.” The “pogo” is a dance where people jump up and down as if on a pogo stick. The late Sex Pistol, Sid Vicious, claimed that he invented the pogo in 1976 at shows in clubs in the early days of London’s burgeoning punk scene. The music video for “Safety Dance” received heavy rotation on MTV at the time and was surely the inspiration for the Stonehenge scene in the 1984 film, This Is Spinal Tap. Personnel on the record were: Ivan Doroschuk (vocals, guitar, piano, drum programming), Allan McCarthy (keyboards, programming, percussion), Stefan Doroschuk (guitar, violin), Colin Doroschuk, Daniel Vernette (guitar), Anne Dussault (backing vocals), and Michel Jermone (castanets).
Rhythm of Youth was recorded between January and March 1982 at Listen Audio in Montreal, Quebec. Produced by Marc Durand, it was released in April 1982 in Europe and Canada and in March 1983 in the U.S. It went to #13 on the Billboard 200 Albums chart and has been certified Gold by the Recording Industry Association of America. All the songs on the LP were written or co-written by lead vocalist Ivan Doroschuk. Four singles were released from the album.
Men Without Hats is a Canadian new wave synth-pop band formed in Montreal in 1977. The band achieved its greatest success in the 1980s. After a hiatus for most of the 1990s and 2000s, band leader Doroschuk re-formed the band in 2010. Twenty-eight members have passed through Men Without Hats since its inception, with Doroschuk being the only original member still in the band. They have released seven studio albums, five compilation albums, two EPs, and 11 singles. Men Without Hats still records and tours and will begin playing festival dates starting in January 2023.
