Released on August 4, 2010
(Next Release on August 11, 2010)

Propane Stocks Update

As the calendar turns to August, ahead of the typical increase in propane use with the start of the crop-drying season and the advent of colder weather, it is timely to assess the recent data on propane stocks, which typically build throughout the summer. So far this summer, U.S. propane stocks are building at a slower pace than last year, and currently stand 20 percent lower than the year-ago level according to the Weekly Petroleum Status Report for the week ending July 30.

This year, growing propane use by petrochemical companies during the winter and spring pulled down stock levels to start the summer. Meanwhile, favorable arbitrage has encouraged strong propane exports to the Southern Hemisphere. However, the reduction in propane stocks relative to the year-ago level can primarily be traced to atypical market conditions during 2009, when a sharp downturn in economic activity and overall lower demand for fuels and petrochemicals, both in the United States and abroad, cut into propane use, encouraging summer stock building. In fact, weekly inventory levels for the end of June and beginning of July 2009, the mid-point of the propane stock-building season, were 10 to 20 million barrels above those for the previous 6 years (the period for which EIA has collected weekly propane stock data during the summer). Moreover, more complete monthly data shows that end June 2009 propane stocks were the highest since 1981.

The current supply picture appears much more robust when compared to years other than 2009. Propane stocks currently stand just 2 percent lower than the 5-year average, and are 17 percent higher than the same week in 2008. As seen in Figure 1 below, propane inventories currently reside comfortably within the seasonally-adjusted 5 year average range. If typical patterns hold over the next three months, propane stock building should continue through the middle of October, pushing stock levels upward another 10 -15 million barrels, resulting in average seasonal levels at the outset of the winter heating season.

Figure 1. Propane stocks are building adequately

Source: EIA Weekly Petroleum Status Report

U.S. Average Retail Gasoline Prices Decrease by a Penny
The U.S. average retail price for regular gasoline decreased over one cent to $2.74 per gallon after increasing by almost three cents the previous week. This week’s price is still $0.18 per gallon higher than this time last year. Price changes were mixed throughout the country, with the Midwest seeing the largest price decrease of almost 5 cents to $2.70 per gallon after the region saw larger prices increases than the national average over the previous three weeks. East Coast and Rocky Mountain prices both rose about half a penny to reach $2.67 per gallon and $2.75 per gallon, respectively. Gulf Coast prices fell about one cent but remained the lowest in the nation at $2.58 per gallon. The West Coast averaged $3.07 per gallon after edging down just a tenth of one cent; California prices fell half a penny to $3.13 per gallon.

Retail diesel fuel prices rose about one cent to reach $2.93 per gallon. Prices were up throughout most of the country, although New England saw a price decline of half a penny to $3.01 per gallon. West Coast prices averaged $3.07 per gallon after increasing one cent. The largest price increase occurred in the Rocky Mountains, where prices increased almost two cents to $2.94 per gallon.

Propane Stocks Continue to Build
Total U.S. inventories of propane rose 2.2 million barrels last week to end at 55.2 million barrels. The bulk of the gain in inventories was realized in the Gulf Coast region, which added 2.0 million barrels. Elsewhere, East Coast stocks gained 0.1 million barrels while the Midwest experienced a 0.2 million barrel stock build. The Rocky Mountain/West Coast regional stocks drew 0.1 million barrels. Propylene non-fuel use inventories represented 5.4 percent of total propane/propylene stocks.

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