Filling up your propane tank at the local gas station or grocery store won't cost nearly as much as previous years as some prices are at record lows.
Prices have plunged as supply is high, storage facilities have hit near capacity and there hasn't been nearly as much demand in recent years.
Experts suggest it's OK to let the grill warm up a little more than usual this year, without breaking the bank.
"Propane is very weak," said Gerry Goobie, an engineer with Gas Processing Management, a consulting firm in Calgary that works with the gas industry. "Over the last year or so, demand has not been very strong for propane, largely because of the warm winter, limited demand for crop drying, home heating, petrochemicals."
It's a welcome change for people who were hit with a massive spike in prices and a propane shortage in early 2014. Bills skyrocketed, especially for those people who rely on propane to heat their homes or use the fuel to run their trucking fleets. At the time, the problem was so bad that then-energy minister Joe Oliver ordered the Competition Bureau and National Energy Board to investigate the propane market.
While retail prices peaked at $1.11 per litre in early 2014, the cost has now dropped to 59 cents a litre. That's the price for auto propane, which is used for vehicles and barbecue tanks. The cost of propane for home heating is typically a little lower because it is purchased in bulk. The average retail price hasn't been this low in Canada since 2009.
"We are awash in propane," said Dirk Lever, an energy researcher and analyst with Altacorp Capital in Calgary. "Propane prices in the U.S. have hit a record low."
You don't need to rush to fill up your tank, as prices aren't expected to change this summer.
"Supplies continue to surge, we have a glut," said Peter Argiris, an analyst with oil and gas research firm Wood Mackenzie.
Pay to take it away
Propane is not only used for barbecues and patio heaters, but for several other uses such as for heating homes in some rural areas of the country, as a vehicle fuel, and to dry crops such as corn, among other applications.
For producers of propane, the market is causing a significant headache. Some companies have given up hope of selling their propane and are actually paying to get rid of it.
The majority of Canada's propane is produced in Alberta. Supplies are so high in that province, the gas is practically worthless.
"It's very bad in Edmonton. We've actually had reports of negative propane prices," says Goobie. "They are not paying you to take it away, unfortunately, from a consumer's perspective."
Storage facilities in Western Canada are holding record high inventories of propane, according to the National Energy Board. The value of propane is higher elsewhere in the country and continent, but producers are having a tough time shipping the propane out of Alberta.
There is only one pipeline that transports propane out of Alberta, the Enbridge Mainline, which flows propane as a mix of liquids, primarily to Sarnia, Ont. Otherwise, propane is hauled by rail. The problem is a backlog on the railways. A pair of new railway terminals may help alleviate the propane supply pressures.
The backlog of propane in Edmonton has caused record low prices for producers. In mid-May, wholesale propane prices at hubs in Ontario and Kansas traded at around 56 and 43 U.S. cents per gallon, respectively. In Edmonton, the price was just three U.S. cents per gallon.
Propane and certain other types of gases are considered natural gas liquids (NGLs). Others, including butane and ethane, have also seen price drops.
The majority of NGLs are produced in Canada by processing natural gas. They can also be produced when oil is refined. NGLs are naturally contained inside natural gas and oil. Back in the '60s, NGLs were often flared off because they were undesirable, seen as a useless byproduct of oil and natural gas production. Now, producers have to find a market for them.
A few years ago, NGLs were a lucrative market and a way for companies to add extra profit to the barrel of oil or natural gas they were producing. But with current prices, NGLs can actually cut into profit for some companies in Alberta.
"Storage is full, producers continue to produce, they have to pay somebody to actually take it way," says Goobie.
Analysts see a connection between the over supply of propane and the global glut of oil.
"This is what happens with modern technology. There is a huge rush to supply, it overwhelms the marketplace, and it takes time to figure out what level of drilling is needed, how we go forward," says Lever.
"Modern drilling and technology have been a game changer. It has created a lot more hydrocarbons than was ever considered possible 10 years ago. When you get steep change like that, everybody has to re-calibrate constantly."Suggest a correction