Feature 1 — Propane Supply
Handling Propane Supply Uncertainty Amid Global Conflict
Experts share their best moves to get ahead of supply disruptions, even when ambiguity looms
By Pat Thornton
“Conflict in the Middle East best describes the volatility within the energy markets for 2026. While oil prices have seen a surge from $65/barrel [bbl] to almost $120/bbl, propane prices have seen a much less volatile reaction here in the U.S.,” said J.D. Buss, president of Westlark Advisors. “In fact, the high-to-low for Mt. Belvieu, [Texas], propane prices from March 1 to present has only been 21 [cents per gallon].”
Buss has one word to explain such a “tame” reaction while oil, refined products and other energy items have surged: infrastructure. “The U.S./Iran war, and now broader conflict in the Middle East, has wreaked havoc with LPG [liquefied petroleum gas] supply chains in Asia,” he said. “Nations such as India and Bangladesh, which previously relied heavily on Middle East supply, have had to frantically search for other options. Much of that supply has now come from the U.S.”
Buss said that normally an increase in demand for U.S. supply should drive propane prices even higher. “But here is where the struggle exists,” he said. “If U.S. export capacity was double the existing amount, it would have all been consumed by international markets.
“Having an additional 2 million barrels [MMbbl]/day of capacity would have allowed up to another 360 MMbbl of propane (and/or LPG) to exit the U.S. from March through the end of August,” he continued. “Using this hypothetical situation, U.S. inventory levels would have been in a major deficit, and prices may have been much closer to oil values.”
According to Buss, a lack of export infrastructure has allowed propane inventory levels in the U.S. to reach record highs, kept prices in a relatively tight range and potentially lulled U.S. demand markets to sleep. “Looking out over the coming weeks and months, more export capacity will become available,” he said. “How that is utilized and what that does to record-high inventory levels will be vital for current prices — and for the future.”
“Restrictions on the Strait of Hormuz and Bab-el-Mandeb [Red Sea] highlight the fragile status of Middle Eastern LPG supply and should be telling international clients to permanently reposition their supply portfolios,” Buss said. “Diversification to U.S. supply means that exports will continue to flow at higher levels for years into the future.”
Buss noted that current Mt. Belvieu and Conway, Kansas, prices may be more stable due to a lower level of infrastructure, but that situation will not last forever. “The world sees the cheap value of U.S. propane and will be looking to consume it. That means the domestic U.S. markets need a greater awareness of how international markets are pricing and what demand regions will be searching for product, and will need to invest more in their own storage and transportation infrastructure to counter the potential price swings that global demand will inflict on U.S. propane values.”
How Should Propane Retailers Approach Buying for 2026-27?
While propane is less volatile than oil, refined fuels and many other products, there are still plenty of challenges for the U.S. retail propane marketer.
“The war in Iran has caused extreme volatility with the prices of propane here in the U.S.” said D.D. Alexander, president of Global Gas and chair of the National Propane Gas Association. “It has also caused significant inventory swings depending on weekly exports of propane.”
Her suggestion for pre-buying is to try to buy during the dips in the price of propane. “Layering in your propane purchases is extremely important this year due to the volatility. When you see the price of oil go down drastically, that is a good sign propane is also down. Personally, I would look for buying opportunities when the price of propane is below 35% of the price of crude.”
“The good news is that availability shouldn’t be an issue; the bad news is that price may be,” said Anne Keller, managing director at Midstream Energy Group. “It’s difficult to look at the news and not see a path leading to a spike in crude prices before year end — that may carry through to propane even if supply is there.”
Keller noted a hidden concern is that the refineries running at max rates start having more operational issues that could affect throughput in locations that serve high-demand markets. “Early indications are that winter won’t be as severe as last year, but this isn’t the year to leave room in storage. Top off the tanks.”
“A retailer has no control over the geopolitical events driving energy markets,” said Jeff Thompson, senior advisor at Synergy Commodity. “There is little value in trying to ‘outsmart’ or ‘outrun’ the market by making procurement decisions based on predictions about ceasefires, military actions or political negotiations.”
Thompson noted large energy companies, investment banks, hedge funds and governments with access to significantly more information than a propane retailer — and billions of dollars at stake — still struggle to consistently forecast these events and their impact on prices. “The control lies in how a retailer plans. Rather than developing a procurement plan based on where prices are expected to go, retailers should develop a plan based on what they need their business to accomplish. That plan should focus on protecting and growing gross margins, securing adequate supply, maintaining cash flow and managing risk.”
“The U.S. propane market has been insulated from the effects because of our extreme inventory situation,” said Phil Farris, director of wholesale marketing at 3Eight Energy. “That can eventually change and probably will. Additional export capacity coming online later this year, combined with a cold El Niño as winter begins, and inventory could be cut in half in a few months.”
“One of the greatest dangers during periods of uncertainty is what I call ‘speculation creep,’” Thompson said. “It begins when a retailer gradually shifts from critically thinking about strategy to making market bets based on opinions about future price direction. The retailer delays purchasing because prices are expected to fall or gets overly aggressive in buying if they think prices are expected to rise. In either case, the focus moves away from margin management and toward price prediction.”
Farris added, “Despite the issue(s), the annual guidelines for propane supply strategies don’t change. If you’re confused or concerned, you contract with experienced supply and transportation partners. Where the gas comes from is part of that discussion. It’s not always the cheapest or closest option. Having an alternative or secondary plan lined up only works if you have trucks to get there. Fixed price deals are logical; the upside from where Mt. Belvieu is today is far greater than the downside. If you’re not concerned and comfortable with these developments, then ignore contracts and chase the cheapest summer spot deals. Cross your fingers come winter and assume somebody will be there to take care of things. (That’s sarcasm, not an actual recommendation.)”
“A potential unintended consequence of the impact of the war is to speed up the move away from oil in the transport markets, at least,” Keller said. “Although sales of electric vehicles in the U.S. have fallen off since the tax credit expired, sales of hybrids are strong. Their share of the U.S. vehicle market is growing; my hybrid gets two times the mileage of my old car, and enough of us makes a dent in gasoline demand.
“Propane is a great vehicle fuel, already used in trucks and buses instead of diesel,” she continued. “Since it has less energy density than diesel, it takes more gallons to go the distance, but the surplus situation here provides plenty of gallons for expanded markets if people realize that diesel is likely to only get more expensive.”
Why Energy Companies Need to Invest in Cybersecurity to Prevent Supply Risks
From GlobalData
Energy infrastructure is a high-value target for cybercriminals. Attacks on critical national infrastructure can have an outsized impact, disrupting essential services, causing nationwide instability and generating financial gains for hackers. As geopolitical uncertainty intensifies, so does cyber espionage, making it crucial for energy companies to invest in resilient cybersecurity programs, says GlobalData, an intelligence and productivity platform.
GlobalData’s strategic intelligence report, “Cybersecurity in Energy,” highlights how cybersecurity impacts key challenges in the energy industry. These include digitalization, distributed energy resources, grid modernization, supply chains, third-party vendors and geopolitics.
Ravindra Puranik, oil and gas analyst at GlobalData, commented, “Energy companies depend on extensive third-party ecosystems, making supplier vulnerabilities a major cyber risk that can spread into IT and OT environments. Attacks exploiting shared vendor software (e.g., file-transfer tools) have hit major players.”
Puranik continued, “Mitigation requires stronger vendor governance, such as continuous monitoring, standards, segmentation, least privilege, audits and joint incident response.”
GlobalData notes that digitization and the convergence of IT and OT (operational technology) are connecting legacy assets and modern grid technologies, expanding entry points where IT compromises can disrupt operations. Generative artificial intelligence further increases attacker speed and sophistication, shrinking defenders’ response windows.
Puranik concluded, “Oil and gas firms should invest in specialized cybersecurity services that provide continuous monitoring and rapid response, expert validation and strong operational readiness. Equipment and oil field service providers should also add product-focused services such as secure development support and security audits/certification to reduce supply chain risk and maintain customer trust.
“Cybersecurity is integral across the oil and gas value chain, for securing data, safeguarding asset integrity and preventing financial losses.”
Is There a Possibility of US Supply Shortages?
For the week ending July 17, while many energy sources were down, propane’s U.S. inventory was up 34% over the five-year average. BPN asked the experts if they have any serious concerns about propane supply shortages in the U.S.
“National inventory levels appear comfortable. However, retailers should remember that customers are not served by [Energy Information Administration] numbers,” Thompson said. “Customers are served by local supply terminals, transportation networks, storage assets and retailer preparation. Of those factors, preparation is the most important.
“Historically, propane supply problems are often less about whether propane exists somewhere in the country and more about whether it can be moved to where it is needed at a reasonable cost,” he said. “Winter weather events, transportation disruptions, regional demand spikes, pipeline constraints and allocations, railcar delays, and unexpectedly strong export demand can all create localized supply challenges despite abundant national inventories.”
Thompson said that rather than worrying about whether the country as a whole is well supplied, retailers should focus on whether their own businesses are prepared for a range of outcomes. “Do they have adequate supply agreements in place? Do they have diversified supply points? Have they secured transportation capacity? Is storage filled when opportunities arise? Have margin targets been established and protected?
“In fact, for a retailer that has planned well and remains disciplined, supply disruptions often create opportunities rather than threats,” he continued. “The retailer who has mapped out gross margin objectives, secured supply and established procurement strategies is in a much different position than the retailer who waits to react after problems develop.
“When supply becomes tight, many retailers begin scrambling for gallons, paying elevated spot prices, adjusting delivery schedules and dealing with anxious customers,” he said. “The retailer who planned ahead is far less likely to be caught in that scramble. Instead, that retailer can continue operating according to a strategy developed months earlier.
“This is where great retailers separate themselves from the competition,” he explained. “While others are focused on locating propane, a prepared retailer is focused on serving customers. While competitors are worried about covering supply needs, the disciplined retailer is executing a plan, protecting margins and maintaining service levels.”
He continued, “We have all heard stories of retailers becoming difficult to reach when supply gets tight, deliveries fall behind or market conditions become challenging. The well-prepared retailer does the opposite. The phone gets answered. Customers are informed. Commitments are honored. In many cases, these retailers gain customers during the very periods when competitors are losing them because they remain dependable when dependable service matters most.”
Thompson said the logistics strategy is not complicated, but it does require discipline. “Secure supply before you need it. Diversify supply sources whenever possible. Maintain adequate storage. Establish transportation options in advance. Protect target margins. Most importantly, avoid becoming dependent on the spot market during periods of stress.
“The industry needs to learn that it is easier to plan for the future than to predict the future,” he concluded.
“We’ve been fortunate for several years to not have inventory issues,” Farris said. “The issues have always been centered around infrastructure — the ability to deliver and distribute quickly and efficiently. It gets cold, trucks rush to the terminal, get in line and wait, and eventually get to their destination just in time. It’s a simple process but a decades-old system.
“From an expense/time point of view, does it make sense for a driver to get paid sitting in line for 7 hours, or spend 7 hours driving to an alternative supply point? It comes down to wait time versus extra freight, wear and tear, plus the extra cost of gas at the secondary spot option,” he said.
“With refineries running hard, supply shouldn’t be a concern; but outages could happen, and it’s harder to compensate for those in locations with single refineries,” Keller said. “Make sure the tanks at distribution centers in high-volume areas are loaded prior to the depths of winter. Maybe there’s an opportunity to use the headlines to your advantage by running a ‘get ready for winter’ special during the next round of ceasefire discussions when prices get pushed down again? Cynical, I know, but it’s where we are these days.”
“While we have extremely high U.S. inventories overall, there are always concerns if we will have the necessary product in the necessary regions,” Alexander said. “As we know, most of the U.S. product is mainly in Mt. Belvieu and, secondarily, in Conway. Depending on weather in different regions, we always have logistical issues to be concerned with.”
Alexander said marketers need to be contracted for most of their propane needs, work with a loyal supplier and trust in their transportation company. “If any of those links are weak, you will have issues if we have any weather at all. Look back at your last year. Talk to your suppliers to make sure any issues [from] last year won’t be an issue this year.
“Do your part. Keep your storage full and keep your customers’ storage at a reasonable level,” she concluded. “Make sure you have the appropriate staff going into winter. Always let your suppliers know when you will need additional volume that month. The sooner you plan, the better.”
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