According to the EIA, Michigan uses more propane for residential space heating than any other state in the country
(9%). A unique feature of propane, also referred to as LPG or Liquefied
Petroleum Gas, is that it is not produced for its own sake, but is a byproduct of natural gas processing and petroleum refining. When oil refineries make major
products such as motor gasoline and heating oil, some propane is produced as a by-product of those processes. It is
important to understand that the by-product nature of propane production means that volumes cannot be adjusted when
prices and/or demand for propane fluctuate. This can lead to more volatile price swings when supply issues are present.
Although imports provide the smallest component of U.S. propane supply, they are vital when consumption exceeds
available domestic supplies of propane.
Propane naturally occurs as a gas at atmospheric pressure but can be liquefied if subjected to moderately increased
pressure. Because propane is 270 times more compact as a liquid than as a gas, it is transported and stored in its
liquid state. Propane returns to a gas when released from its pressurized container where it is utilized for space heating
and a wide variety of other purposes. Simply stated, propane is always a liquid until it is used. Although propane
is non-toxic and odorless, an identifying odor is added so the gas can be readily detected.
The primary mode of transporting propane within the United States is by approximately 70,000 miles of interstate pipelines.
The pipeline system is most developed along the corridors between production areas and petrochemical consumers along
the Gulf Coast and the agricultural-industrial consumers in the Midwest. The Northeast and South Atlantic States each
are served by a single pipeline. The upper Midwest also is served by two lines from Canada. Other modes of transport
include about 22,000 rail tank cars, 6,000 highway bulk transports, 18,000 local delivery trucks, about 60 inland
waterway barges and several ocean-going tankers.
Similar to the storage of natural gas, Michigan is a regional supply center with an ability to store large volumes of propane in underground rock formations and caverns. Above ground storage is also utilized and is distributed among a variety of propane wholesalers and marketers. Tank sizes range from approximately 9,000 to 30,000 gallons.Â During the winter months supply is drawn almost entirely from storage with imports used only to moderate weather and price fluctuations.
Propane is primarily transported by truck to end users by dealers who come to the distributor's bulk plant to fill up their small tank trucks. These tank trucks, called "bobtails," deliver
propane to large storage tanks that are outside homes. The average residential propane tank holds between 500 and 1,000
gallons of liquid fuel, and is refilled several times a year. Personal canisters for recreational uses, such as camping
equipment or backyard barbecues, are brought to convenience and hardware stores to be filled or to be exchanged for full