Why Propane Prices Are Higher This Winter
Propane prices have been higher this winter than last year, mainly due to colder temperatures in January and increased propane exports. Even though propane inventories were substantial at the start of the heating season, the combination of freezing weather and demand from overseas markets has driven prices up.
Wholesale Propane Prices Are Rising
Wholesale propane prices at Mont Belvieu, Texas, the leading pricing hub in the U.S., have averaged $0.81 per gallon from October 2024 through January 2025. This is $0.13 per gallon higher than during the same period last year. By the week ending January 20, 2025, wholesale propane prices had reached $0.97 per gallon, compared to $0.79 per gallon last year.
One of the most significant factors influencing wholesale propane prices is exports. The U.S. exports more propane than it consumes, so less propane is available for the domestic market when exports increase. In 2024, propane exports averaged 1.8 million barrels daily, 9% higher than in 2023. This level of demand from international buyers has contributed to higher prices.
Retail Propane Prices Follow the Trend
Retail propane prices generally rise during winter as demand for heating increases and inventories are used up. Retail prices have averaged $2.51 per gallon this season, which is $0.07 more than last year. Since the start of the winter heating season, retail prices have increased by 5%, reaching their highest levels at the end of December 2024.
Prices have increased across all four regions where propane prices are tracked: the East Coast, Midwest, Gulf Coast, and Rocky Mountains. Like last winter, retail prices remained steady until mid-winter, when wholesale prices at Mont Belvieu began to climb as temperatures dropped. More heating degree days—a measure of how cold it has been—were recorded in December 2024 compared to December 2023, and forecasts suggest that the rest of the winter will likely be colder than last year.
What This Means for Propane Businesses
Higher wholesale and retail propane prices have a noticeable effect on businesses across the supply chain. For propane retailers, increased prices may lead to tighter margins and the need for better inventory planning. Since exports continue to rise, businesses must ensure they have enough supply for their customers while managing costs effectively.
The cold winter also means propane businesses must be prepared for higher demand. Customers relying on propane for heating will need timely deliveries, and companies that can manage their supply efficiently will have an advantage. Keeping customers informed about price trends and potential changes can also help build trust and strengthen customer relationships.
With propane prices rising, businesses should focus on managing supply, optimizing delivery schedules, and communicating with customers to maintain strong service despite changing market conditions.
