Why the Spring Contracting Window Matters More Than Ever for Wholesale Propane Buyers

By Derek Shaw, Shipley Fuels Marketing Operations Manager, Shipley Energy

The propane market has a short memory… until it doesn’t. After four or five consecutive mild winters between roughly 2018 and 2023, many wholesale buyers settled into a comfortable pattern: buy spot in December or January, take advantage of soft pricing, and avoid the commitment of forward contracts. It worked for a while. Then the winters of 2024–25 and 2025–26 arrived back-to-back, and the market reminded everyone why forward planning exists.

Buyers who had contracted their supply in the spring paid their agreed-upon differentials and received their product on schedule. Buyers who hadn’t found themselves scrambling — paying 40 to 50 cents per gallon more than they would have if they’d locked in ahead of time, and in some cases, unable to secure supply at all. One of the largest national propane suppliers operating in Pennsylvania was delaying customer deliveries by two weeks this past winter while contracted suppliers were still delivering on time.

The spring contracting window, March and April, is upon us. For wholesale propane buyers across the Mid-Atlantic, this is the most consequential planning decision of the year. This article examines what the past two winters exposed, why the structural dynamics of the East Coast propane market make forward contracting more critical than ever, and what wholesale buyers should evaluate as they prepare for winter 2026–27.

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What Happened to the Mid-Atlantic Propane Market in 2024–2026?

The short answer: two severe winters in a row after years of relative calm broke the market’s complacency.

In January 2026, NASA’s Earth Observatory documented an extreme cold event across much of the country east of the Rockies, describing the cold spell as notable for its severity, longevity, and geographic scope, with frigid Arctic air funneling into eastern North America and persisting for over a week. AccuWeather classified the winter of 2025–26 as the first severe winter since 2017–18 in multiple Midwest and Northeast cities, including Philadelphia and Allentown, Pennsylvania.

The severity wasn’t just a matter of temperature. It was the cascading effect on supply infrastructure. In central Pennsylvania where there is no direct pipeline access to communities like Harrisburg, Chambersburg, and Northumberland, propane supply depends heavily on rail. Rail delivery is vulnerable to disruptions from weather, labor actions, and congestion. During the coldest stretches of the past two winters, rail delays compounded with terminal equipment failures. Trucks that normally loaded in 15 minutes were waiting four to five hours. Multiple supply points across the state experienced problems simultaneously, something that hadn’t occurred at this scale in years.

The buyers who made it through without interruption were the ones who had contracted their supply the previous spring, diversified their sourcing, and worked with suppliers who had the infrastructure and planning to shift loads between supply points on short notice. The ones who relied on spot purchasing or single-source supply arrangements felt the full weight of the market’s tightening.

Why Is Propane Supply So Vulnerable in Pennsylvania?

Understanding why the past two winters hit so hard requires understanding the structural dynamics that have been reshaping the East Coast propane market for years.

Declining regional infrastructure. The 2019 permanent closure of the Philadelphia Energy Solutions refinery, the largest on the East Coast at 335,000 barrels per day, removed a significant source of locally refined propane from the region. While the market adjusted over time, the loss reduced the margin of safety in the regional supply picture. PADD 1 (East Coast) propane inventories have frequently sat below the five-year average since then, particularly during winter heating seasons.

Record exports tightening domestic supply. According to the U.S. Energy Information Administration, propane exports reached a record 1.8 million barrels per day in 2024, marking the seventeenth consecutive year of export growth. Industry data from CHS Inc. indicates that propane exports accounted for approximately 65% of U.S. production in 2024, up from 52% just two years earlier. More propane leaving the country means less available domestically, particularly for regions like the Mid-Atlantic that depend on product shipped from Gulf Coast and Appalachian sources.

Inventory tightness. According to RBN Energy analysis published by the National Propane Gas Association, PADD 1 propane stocks as of early February 2025 were roughly 46%, or 2.9 million barrels, below the five-year minimum. January 2025 inventory withdrawals were estimated at 23.6 million barrels nationally, nearly double the five-year average of 13.1 million barrels for the month. Those numbers set the stage for an even more challenging winter the following year.

The Marcus Hook disruption. In late November 2025, the Marcus Hook terminal in the Philadelphia area, one of the largest underground propane storage and distribution sites on the East Coast, experienced an electrical transformer failure that disrupted loading operations. The facility’s operator, Energy Transfer, declared force majeure and reduced customer allocations to 70% of contracted volumes. The disruption prompted a four-state energy emergency declaration from the Department of Transportation, covering Pennsylvania, New Jersey, Delaware, and New York, which waived trucking-hour restrictions to keep deliveries moving. [6] For suppliers heavily dependent on Marcus Hook, this was devastating. For diversified suppliers, it was a manageable disruption: a few days of redirected loads rather than weeks of shortfall.

Compounding failures in central PA. The challenges didn’t stop at Marcus Hook. The Schaefferstown, PA underground storage caverns, converted natural gas storage facilities that serve as a key propane supply point in central Pennsylvania, experienced equipment breakdowns in late January and February 2026, resulting in allocated supply and reduced throughput. At the same time, rail-fed terminals in the Harrisburg corridor were experiencing delays and congestion from the cold. At any given point during the winter, multiple supply points were compromised simultaneously, a scenario that stress-tests every buyer’s supply strategy.

How Does Wholesale Propane Contracting Work?

For buyers who haven’t participated in the forward contracting process before, or who have been buying spot for so long that the process feels unfamiliar, here’s how the wholesale propane purchasing cycle operates.

The March-April planning window. Unlike most petroleum products, where purchasing can happen on monthly or quarterly pipeline cycles, propane contracting follows the producers’ planning calendar. Producers lock in supply obligations from their customer base for the upcoming year during March and April. This is when the serious purchasing conversations happen.

Mont Belvieu sets the benchmark. Virtually all wholesale propane in the United States is priced relative to the Mont Belvieu, TX spot market, the national hub where propane is stored, processed, and traded in enormous volumes. Mont Belvieu pricing serves as the basis for the entire country’s propane market. Wholesale buyers don’t typically pay a flat per-gallon price. Instead, they agree to a differential, an adder over the Mont Belvieu benchmark, that reflects transportation, logistics, and seasonal demand.

Volume commitments and seasonal ratios. Producers evaluate customers based on their year-round volume profile. For every gallon a buyer lifts during the summer months, the expectation is roughly three gallons in winter. Buyers with flatter, more consistent demand profiles such as a 1:2 summer-to-winter ratio will generally receive more favorable pricing because they reduce the producer’s seasonal imbalance.

Coverage targets. Experienced wholesale buyers don’t try to contract 100% of their expected demand; markets can shift, and some flexibility is valuable. But they also don’t leave large portions uncontracted. A sound strategy typically covers 90 to 98% of projected annual demand, leaving a small buffer for spot purchases. During mild winters, the spot purchases might be modest and attractively priced. During the winters of 2024–25 and 2025–26, spot prices were 40 to 50 cents per gallon above what pre-contracted buyers paid.

Pricing structures. The most common wholesale arrangement is the variable differential over Mont Belvieu. Fixed-price contracts are also available for buyers who want absolute cost certainty for budgeting purposes. Cap programs, where you set a maximum price but benefit from downside movement, are less common at the wholesale level but available from some suppliers.

The cost of waiting is real. Every year, there are buyers who intend to contract but don’t act during the spring window. They wait through summer, assume winter will be mild, and plan to buy spot. After two consecutive severe winters, the data is clear: the spring contracting window exists for a reason, and the cost of missing it can be significant.

What Should Wholesale Propane Buyers Look for in a Supplier?

Not all supply arrangements are created equal. If the past two winters taught the market anything, it’s that the lowest price on paper doesn’t matter if the product doesn’t show up. Here are five criteria that should drive wholesale propane supplier evaluation:

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1. Genuine Supply Diversification Across Multiple Modes

True diversification means your supplier isn’t just lifting from two terminals served by the same railroad. It means they have access to rail, pipeline, trucking, and physical storage across geographically distinct supply points. This past winter, basically every type of supply point in central Pennsylvania experienced problems at some point: rail terminals backed up, pipeline-fed terminals had equipment failures, and storage facilities went on allocation. A supplier that could shift between Philadelphia, Bethlehem, Schaefferstown, central PA rail, and out-of-state sources in Ohio or West Virginia could keep moving product. A supplier dependent on one or two sources in the same corridor could not.

2. Owned Fleet and Transportation Assets

During a tight market, third-party carriers get stretched thin. They serve their highest-paying or highest-priority customers first, and smaller wholesale accounts can find themselves waiting. Suppliers who own their trucks and employ their own drivers have a critical operational advantage: they control their logistics regardless of market conditions. They can redirect vehicles to alternative supply points on short notice without negotiating with a third-party dispatch.

3. A Track Record Through Adversity

Ask any prospective supplier specifically about the winters of 2024–25 and 2025–26. Did they keep every customer whole? Were deliveries delayed? Did they stop taking new customers? Did they have to short-ship or push back delivery windows? These two winters are the ultimate stress test, and any supplier that maintained full service through both has earned a level of credibility that no sales pitch can replicate.

4. Scale That Creates Economy

Larger suppliers with significant residential and commercial base-load demand create purchasing leverage that smaller buyers simply cannot replicate independently. If your operation buys 50,000 to 100,000 gallons per month, you can’t reasonably split that volume across multiple suppliers as few suppliers will contract for one or two loads. But if your supplier is buying millions of gallons across a diversified customer base, you benefit from their economy of scale, their supplier relationships, and their negotiating position without having to build those capabilities yourself.

5. Infrastructure Investment and Long-Term Commitment

The wholesale propane landscape in Pennsylvania has shifted in recent years. Some long-established players have seen their market share decrease. New entrants have acquired terminals and become pipeline shippers. When evaluating suppliers, look at who is investing in local infrastructure: terminal access, pipeline capacity, storage. If a supplier has invested capital in the market, they’re more likely to have product available when conditions tighten. If they’re simply reselling someone else’s supply and competing on price, they may not be able to back up an attractive number when it matters most.

How Shipley Energy Approaches Wholesale Propane Supply

At Shipley Energy, our approach to wholesale propane is shaped by the same principles that have guided our residential and commercial fuel operations for decades: plan ahead, diversify supply, and never put customers in a position where they can’t get the product they need.

We purchase 95 to 98% of our projected annual propane demand during the spring contracting window, evaluating the entire market across 15 to 20 supplier conversations. We don’t just chase the lowest price. We evaluate which suppliers have invested in local infrastructure, which ones have proven operational consistency through difficult conditions, and which ones have the physical supply to back up their commitments when the market tightens.

Our supply footprint spans multiple modes and geographies: pipeline-fed terminals in the Philadelphia area, storage caverns, rail-served terminals in central Pennsylvania, and out-of-state supply points that we can activate when regional infrastructure comes under stress. We operate our own trucks with our own drivers, so our wholesale customers are never dependent on third-party carrier availability.

This past winter, when Marcus Hook went on force majeure and Schaefferstown experienced equipment failures, when rail deliveries slowed and loading times at terminals stretched from 15 minutes to four or five hours, we kept every customer whole. We shifted supply between terminals, drove farther when needed, and communicated proactively about conditions at each site. Our exposure to the Marcus Hook disruption was approximately two days of demand because of our diversified sourcing, while some operators dependent on that single terminal faced weeks of shortfall.

We maintain a dual perspective on market conditions that most wholesale buyers don’t have access to. Our drivers are at the terminals daily, reporting real-time conditions on the ground such as loading times, equipment status, and congestion. Our purchasing team maintains upstream relationships with suppliers and producers, providing a view of the broader market dynamics. When conditions tighten, we communicate closely with our wholesale customers on a near-daily basis about what’s available, where, and what to expect so they can keep their own operations running smoothly.

The Window Is Open, Act Now

The spring contracting window for wholesale propane is here. March and April are when the serious purchasing decisions get made for the upcoming contract year, and after back-to-back severe winters, the case for forward contracting has never been stronger.

The structural dynamics of the East Coast propane market, tighter PADD 1 inventories, record export volumes, aging infrastructure, and the inherent vulnerability of rail-dependent supply chains in central Pennsylvania, aren’t changing. If anything, they’re intensifying. The buyers who plan ahead, contract with diversified suppliers, and secure their supply before the heating season will be the ones who operate with confidence next winter. The ones who wait and hope for another mild season are gambling with their supply security and their cost structure.

If you were burned this past winter, or the one before, now is the time to have a conversation about what a sound wholesale propane strategy looks like for your operation. The window is open, but it won’t stay open long.

Contact Shipley Energy’s wholesale fuels team to discuss your propane supply strategy for the 2026–27 contract year.

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