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Industry News

Retailers Advised on Factors that

Could Impact Supply this Winter

By: James Guyette

arying degrees of
uncertainty over what
Vwinter will bring are
routinely top-of-mind during
the summer and fall propane-
buildup periods, but the
temperature has been turned
up a notch for marketers
preparing for this year’s heating
season.
Economic pressures, a
virulent global pandemic,
reduced refinery throughput
and robust overseas demand
are among the perplexing Photo by LP Gas staff
challenges faced by propane
retailers.
And even before the first
snowflake falls, experts are Rachal reports, referring to According to Perkins, “all
already warning that relying the latest supply and demand of the advance signals” are
on the spot market as a quick scenarios: How is production suggesting the possibility of
relief valve like in previous years running? Are imports lessening looming supply uncertainties.
could put retailers in a tight spot and exports growing? Has These can take the form
should a period of high demand pipeline access been secured of inventory shortages in a
take hold. and/or rail cars procured? What particular area of demand,
Advisories abound are the latest cost factors? reduced availability of spot
pertaining to contracting And perhaps most importantly, product, an all-around tightness
gallons and formulating a what’s going on with your local of credit regarding financial
flexible business plan going weather conditions? transactions and an assortment
into this winter’s unforeseen Rachal and others are of pandemic-induced impacts
circumstances. predicting an uptrend in pricing on retailers’ ability to schedule
“This is a really, really this year. Propane retailers need deliveries.
unknown situation,” cautions to be prepared for tightness of “The spot market is not
consultant Mark Rachal of Cost supply, he adds, urging them to nearly as robust as it has been in
Management Solutions. build pipeline allocations in their previous years,” says Perkins.
“The only thing normal marketing area. “We do not have an issue of
about this year is that nothing is “If you can’t get the rail cars supply,” he observes. “We have
normal,” concurs Tucker Perkins, from Canada, and you’re getting an issue of logistics.” Plenty of
president and CEO of the less supply from the refineries, overall supply is anticipated, but
Propane Education & Research it’s going to push more people that supply needs to be where
Council (PERC). to the pipelines,” says Rachal. retailers can efficiently access it.
“Everybody’s going to have “We already know the pipelines Retailers should be digging
to be very vigilant and watching have struggled recently – even deeper than usual as they
all of the fundamental pieces,” in mild winters.” make their supply and demand

8 Propane Magazine September/October 2020