U.S. propane stocks increased by 2.5 million barrels last week to 72.8 million barrels as of August 15, 2014, 10.9 million barrels (17.7%) higher than a year ago. Gulf Coast inventories increased by 1.2 million barrels and Midwest inventories increased by 1.1 million barrels. East Coast inventories increased by 0.2 million barrels while Rocky Mountain/ West Coast inventories remained unchanged. Propylene non-fuel-use inventories represented 5.5% of total propane inventories.
Last winter, high propane prices, low inventories and logistical and infrastructure challenges prompted emergency measures to address propane supply shortfalls in the Midwest. Given the severity of last winter's supply challenges, market participants are paying close attention to the adequacy of propane supplies to meet agricultural and heating demands this coming season. While the high-demand season is still some months away, an analysis of propane inventory levels, along with an assessment of propane prices and changes in infrastructure and supply flows, provides some insight into the emerging supply picture.
Midwest propane inventories have an annual cycle, with builds occurring from April through September, in advance of the harvest and heating seasons, followed by draws in October through March. Both the level of inventories and the weekly build rate are useful metrics in assessing inventories as of early August. While inventory levels in the Midwest remain below the five-year average, above-average builds over the past six weeks are an encouraging trend. Last year, propane inventories in the Midwest (PADD 2) for the week ending August 9 were 21.5 million barrels, 3.4 million barrels below the five-year average. This year, PADD 2 propane inventories for the week ending August 8 are 23.4 million barrels, 1.9 million barrels higher than last year, but still 1.6 million barrels below the five-year average. However, in each of the past six weeks, PADD 2 propane inventory builds have surpassed their five-year averages, leading to a steady improvement in stock levels relative to their historical norms (Figure 1).
Safety Grants also Expanded
The Kasich administration is expanding its “Billion Back” program with another $1 billion in premium rebates to policyholders of the Ohio Bureau of Workers’ Compensation (BWC). The money adds to the first $1 billion awarded in 2013 and another $1.2 billion in employer credits to be issued next year as part of the bureau’s switch to prospective billing.
Kasich and BWC Administrator/CEO Stephen Buehrer said strong investment returns rather than employer overpayments are driving the current rebate to roughly 184,000 companies and 3,800 public employers.
“Sound fiscal management and a well-executed investment strategy continue to put BWC in a position where it can return money to its customers -- Ohio’s employers -- but also to workers in the form of initiatives that help them stay safe on the job,” the governor said at Columbus staffing agency Portfolio Creative, which credited the administration for its small business support. "Ohio continues its effort to transform the workers’ comp system to be a better partner with employers and workers to help them succeed and stay safe, and the ability to make these types of significant rebates is part of that effort,” said Kasich.
The governor first proposed the billion-dollar rebate program in May 2013 for approval by the BWC Board of Directors later that month. It became “Two Billion Back” last fall with the announced switch to prospective billing, which kicks off next spring with a six-month credit to BWC employers.