Oil & Energy Investor by Dr. Kent Moors

We May Be In for another Propane Shortage This Winter

by | published August 23rd, 2019

I often say that history repeats itself, and there is nothing where this is most prevalent than in the energy sector; it seems that some of the same energy concerns recur on a regular basis.

About this time last year, I wrote about the continuing problem of an adequate propane supply as rural America moved toward stocking for the winter.

Well, a similar situation is rearing its head again this year, and the normal propane cycle is once again complicated by geopolitics.

Propane is the main source of energy in rural areas, but it has been difficult this time around given the impact of Chinese tariffs on farmers compounded by horrendous floods in the Midwest.

The floods made many farmers ineligible for the grants provided by Washington to compensate for lost soybean and other exports. In order to receive this government payment, one needed to plant one’s crops by a cutoff date.

However, the flooding prevented entire regions from planting in time.

Now, on July 26 last year, I wrote a column in Oil & Energy Investor that applies with even greater urgency today.

Here’s what I mean

Why You Shouldn’t be Worried About an Energy Demand Slowdown

by | published August 21st, 2019

There has recently been much media coverage about an impending decline in aggregate global energy demand.

The argument here – as always – involves a flattening or even decline in energy prices as several factors combine to suppress the need for energy in slowing economies.

Much of the logic behind what pundits are saying here extends from an ongoing U.S.-China trade war, statistics “massaged” to justify another round of short plays, and anecdotal concerns over economic strength issuing from a range of factors – Brexit, Venezuela’s implosion, civil wars in Libya and Yemen, another credit crunch in Italy, among many others.

Traditionally, the relationship seemed straightforward enough. Production, commerce, exchange, transport, and the like generated the need for energy. That translated into a demand on providers, which in turn determined the supply required and the price.

Somewhere along the line, predictions about future conditions came to be controlled more by what current energy traders needed to make now, rather than about any solid estimate of where markets were likely to be in six months.

Six months continued to be the rule of thumb for one simple reason: it usually takes half a year for the genuine figures upon which to base substantive demand judgments to emerge. Before that time, talking heads pontificate, and knee-jerk reactions ensue.

This is the situation we once again find ourselves in as we move into the third quarter of the year.