Propane is the hydrocarbon gas liquid (HGL) that many consumers may be familiar with or most likely consume directly. Consumer-grade propane sold as a fuel for the consumer market contains a minimum of 90% propane by volume. The remaining volume may include other hydrocarbon gas liquids. This product mixture is sometimes labeled as LPG (liquid petroleum gas). Propane is an important fuel for some residential consumers and farmers and has distinct patterns in demand in response to seasonal changes and other influences.
The residential sector is the largest consumer of consumer-grade propane. Residential consumption of propane is highest in the winter, mostly for space heating, and generally occurs in non-urban areas where other heating fuels (electricity, heating oil, natural gas, and wood fuels) are limited or expensive. Propane is also used throughout the year for water heating, cooking, and clothes drying. According to the 2015 Residential Energy Consumption Survey, about 11.8 million U.S. households used propane as a major fuel and about 42 million U.S. households used propane for outdoor grilling.
Propane use by the commercial sector is similar to residential propane use, although in much smaller quantities overall. Propane is also a fuel for forklifts and other equipment in construction, factories, and warehouses. This use is included in commercial and industrial sector consumption depending on the type of business.
The industrial sector includes the petrochemical industry and the agricultural sector. The petrochemical industry is generally flexible in its use of propane and tends to buy propane during the spring and summer when, because of lower demand from other sectors, prices for propane are usually lower than in the autumn and winter.
Agricultural demand for propane generally has two peaks: in the late summer and early autumn after the harvest and again during the peak of winter. The late summer/early autumn rise in demand is mainly for drying grain crops such as corn. If corn harvests are large and the weather is wet, propane demand may surge, as it did in the autumn and winter of 2013. Farmers also use propane to heat livestock housing and greenhouses. If the weather is cold and their onsite propane storage is insufficient, their additional demand can be significant.
The transportation sector contributes the smallest share of total U.S. propane consumption—less than 1% in 2019. Most of this propane use is by operators of vehicle fleets, such as delivery companies, utility companies, government agencies, and public transit agencies. Total transportation sector propane demand is generally flat throughout the year.
Last updated: September 25, 2020