What Will the New Year Bring?
Market Predictions for 2025
Beginning a new calendar year always ushers in predictions (a.k.a. “guesses”) on what will occur over the coming 12 months.
Some analysts predict equity markets will soar to new heights, while others declare a coming market meltdown.
For the energy industry, and specifically the propane/LPG market, there are several possible issues that could impact 2025. Here are a few items that the Westlark Advisors team would like to highlight for 2025.
What Westlark Advisors Will be Watching in 2025
- Will there, or won’t there, be another Polar Vortex?
In the middle of December, some weather analysts point to formations and patterns that appear conducive to the return of the polar vortex to North America. References to the infamous ’13/14 winter are being tossed about.
2. Will there, or won’t there, be U.S. Tariffs on . . . almost everything?
President-elect Trump has discussed tariffs on Canada, Mexico, and China. The first nation is a major energy importer for the U.S., while the second two are major energy export locations for the United States.
3. LPG export capacity will be expanding in the latter part of 2025.
LPG exports are the backbone of LPG production within the U.S., making up 70+% of the total demand for LPG. Current capacity appears to be at a ceiling and both the Enterprise and Energy Transfer expansions hope to raise that ceiling.
4. Propane, along with other Natural Gas Liquids (NGLs), production will keep growing in 2025.
Natural gas production will continue to climb as the U.S. starts to gain a more global presence as a leading LNG export nation. An increase in natural gas will simply keep raising the amount of NGLs in the overall market.
5. More and more global propane/LPG will be tied to the U.S. pricing index at Mont Belvieu.
The rare operational issue that took place at one U.S. export facility in September and October of 2024 emphasized how much of the global trade is influenced by the U.S. pricing hub. As export capacity and production increase, so will the dominance of this pricing point.
Possible Impact of These Items
Immediate Impact
Reviewing the five items above, it appears the first two could have an immediate impact in the first quarter of 2025. The other three will have an impact on the latter half of the year and into the future. At Westlark Advisors, we have already advised our clients on how to address the first two. Now we would like to take some time to quickly address the final three items.
Long-Term Impact
Propane/LPG is a global commodity. And the United States is a global leader in this particular commodity. With these two facts in mind, we look at the expansion of export capacity, growing production, and expanded use of Mont Belvieu as clear indications of the following:
- We NEED a strong knowledge of international factors that drive propane/LPG demand.
- We NEED an understanding that the current propane/LPG market is much more complex than 20+ years ago.
- We NEED to be more vigilant in being ready for price opportunities because global factors could impact Mont Belvieu prices at any given time.
Conclusion
We may not have a DeLorean with a flux capacitor to take us Back to the Future and give us accurate predictions, but we do have a solid grasp of what issues and events could impact the energy industry in 2025.
The factors listed above will likely play a large role in the propane/LPG industry in the next year. These issues are ones the Westlark Advisors team will be watching and supporting our clients through during 2025.
For more information about how your business can navigate through the issues that will impact it in 2025, contact a Westlark Advisors team member!
What Will the New Year Bring?
By JD Buss
