Margin squeeze has significant effect on US gas processors

During the first quarter of 1982, tumbling prices for crude oil and products sharply affected natural gas liquids prices; oil price changes generally have an exaggerated effect on gas liquids prices because NGL volumes are so much smaller than those of crude and refined products. Always the most volatile sector of the US petroleum market, gas liquids experienced steep reverses this year, accentuated by the collapsing petrochemical demand, which toppled ethane demand and shrank propane prices; low motor gasoline demand, which affected butanes; and a nationwide natural gas surplus, which precluded the use of liquids (particularly propane) as substitute industrial and peakshaving fuels. In many cases, the gas processors' operating margin is now insufficient to cover operating costs.