Propane: A Global Commodity for Local and Regional Farmers

Some people think of propane simply as the fuel that fills barbecue cylinders, RVs, and camping stoves. But the truth is that clean, green propane gas has actually been an important part of America’s energy economy – and the world’s energy mix – for more than a century.

Nearly 90 percent of America’s propane supply – about two million barrels a day – is produced right here in the U.S.A. (most of the rest of our propane supply is produced in Canada). In fact, propane is one of the America’s most abundant energy commodities – so much so that each year we export more propane (about 10 billion gallons per year) than any other country.

The fact that propane is traded in global markets has a big impact on the bottom line for a business that uses the gas – including or perhaps especially agricultural businesses, which rely on it for everything from grain drying to coop heating. We’ll talk more about farmers later in this blog – but first, let’s look at the worldwide uses of propane.

A global fuel

Today, more than half of America’s propane supply is exported globally – up from just 10 percent in 2009. The biggest buyers of American propane are China, Japan, and South Korea, whose chemical manufacturers often use propane for making plastic products.

Another major need American propane fulfills abroad is transportation fuel: Mexico, along with many South American and European countries, have relied heavily on propane-powered vehicles for decades, and fleet managers in the U.S. are starting to make the switch, too.

How global propane use affects farmers

Like any globally traded commodity, the price of propane is influenced by a complex web of factors. For example, a cold winter can quickly tighten domestic inventories, causing prices to spike. A change in policy at home or abroad can also strongly affect propane pricing.

While many of these factors are out of your hands as a farmer, you can take steps to minimize propane pricing volatility by taking some proactive steps. Buying in bulk, for example, entitles you to high-volume discounts, while purchasing in the offseason with a Pre-buy Plan allows you to take advantage of favorable pricing in periods where demand is low.

At Advanced Propane, our team of agricultural propane specialists will help you find comprehensive fueling and pricing solutions that will keep your costs as low as possible and your farm up, running and productive. To learn more about convenient, reliable service for your propane-powered farm, contact us today – we’re happy to provide FREE, no obligation estimates on everything from equipment installation to regularly scheduled bulk propane deliveries.

To learn more about how Advanced Propane can serve your Middle Tennessee or Southern Kentucky farm, give us a call today!