Principal contributor: Owen Comstock
The U.S. propane market is highly seasonal: about two-thirds of the propane consumed last year was consumed in the winter months (October through March). In the United States, most propane is consumed in homes during the winter; about 5% of U.S. homes use propane as their main heating fuel. In its latest Short-Term Energy Outlook (STEO), the U.S. Energy Information Administration (EIA) expects 5% more U.S. propane consumption this winter compared with last winter, largely because a cooler winter forecast means more demand for residential space heating.
EIA’s October STEO includes a supplement for consumption, price, and expenditures of residential heating fuels in the United States. EIA expects residential propane expenditures this winter for propane-heated homes to be 18% higher in the Northeast and 12% higher in the Midwest, the two regions where propane heating is most prevalent.
EIA forecasts higher propane expenditures in these regions because it expects higher propane prices and colder weather, which will require more fuel for space heating. EIA also assumes that more people will be working or attending school from home this winter, which will also increase demand for residential heating fuels compared with last winter.
EIA expects the increased heating demand will more than offset reduced demand for propane as a petrochemical feedstock by U.S. industry. Propane is also used as a fuel for drying agricultural crops, and EIA expects less grain drying demand than last year. According to U.S. Department of Agriculture data and forecasts, corn crop maturity in the United States is on track with the previous five-year average, and harvested grain moisture content will be lower than last year, which means less use of propane for drying crops in commercial grain dryers.