Three Questions now that the Fire is Out

The water tower over Mont Belvieu, Texas. (image: Angela Orlando via flickr.com)

The fires burned out at a Mont Belvieu processing plant on Wednesday morning. But now that the smoke has cleared, we’re knocking around a few questions, trying to figure out how a blaze at the country’s largest propane hub will register on the business.

What’s the impact on propane production? The fire has presumably suspended work at a processing and storage facility for a while, and also halted production at a neighboring gas cracker for a day. Meantime, Enterprise Products, which owns the plant, said its main operations were unaffected. Wednesday’s spot prices for Mont Belvieu propane seem to support that, rising less than two pennies, suggesting cool heads prevailed on the trading floor. At the same time, butane prices rose more than a nickel from Tuesday to Wednesday.

What’s the impact on retail prices? Propane prices typically move opposite of the supply side: When supply lines break down, prices go up. So the pricing question hinges on the first question — and a blip in production, will probably translate as a blip for customers’ wallets. (Side note: Enterprise, which has about 125 million barrels of natural gas liquids stored under Mont Belvieu, supplies much of the country through its network of pipelines.)

What’s the impact on public opinion? Tell us in the comments.

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