U.S. propane prices and crude oil prices re-link as exports increase (2/28/2018)

As the saying goes, eventually the solution to low prices is low prices. The U.S. propane market's transition from balancing via imports to balancing via exports is a recent example. In 2017, U.S. propane exports averaged 905,000 barrels per day (b/d), a level high enough to balance U.S. propane markets and re-establish the link between U.S. and global propane prices (Figure 1). This change followed several years in which U.S. propane prices were significantly lower than elsewhere in the world because U.S. propane production had increased significantly, outpacing domestic demand and export capacity. Sustained lower propane prices in the U.S. encouraged investments to expand export capacity, leading to the eventual re-linkage of U.S. prices with global markets. ... More »