It can be daunting to understand how gas pricing works (not to mention oil pricing).
People are searching for information to help them make the most informed decisions about their energy usage.
Propane is super attractive for a variety of reasons. It’s reliable, portable, and super-efficient, meaning you need less of it to do more.
It’s also environmentally friendly and versatile — you can use propane for everything from grills to home heat and beyond.
There are a number of factors that go into propane price per gallon.
Natural Gas and Crude Oil Pricing
Propane is a byproduct of natural gas and crude oil, 70% of all propane is produced from natural gas. During the refining process of gas and oil, the gases left behind are used to create propane. (This speaks to the eco-friendy nature of propane — it’s made up of what would otherwise be wasted.)
Because of this, natural gasoline prices and the price of crude oil naturally affect the cost of propane.
Since propane is used for heating and cooling in many homes and businesses, the weather affects pricing related to supply and demand. Extreme weather in any part of the country can raise the price of propane nationally since it impacts the aforementioned national demand average.
Supply and Demand
The higher the demand, the higher the cost. The demand for propane is determined as the national average instead of being area-specific. For example, even if the demand for propane is high in the west and lower in the east, people in the east will still pay a higher cost than they might if averages were only based on their specific area.
Paying attention to the ups and downs of demand can help you get the lowest propane price possible. If you strike when the demand is low, you can stock up at a good rate — and Paraco even allows you to lock in your rates to stick at that low price for a fixed period.
Export and Production
Because propane is created as a byproduct of natural gas and crude oil, propane’s production is dependent on gas and oil production. So naturally, any increase in gas and oil production will increase propane production, decreasing the price, and any decrease in gas and oil production will decrease propane production, increasing the cost.
The United States also exports propane to other countries, affecting the price.
Market and Transportation Cost
The propane price is affected by how far you live from production and storage hubs. Kansas and Texas are the most significant storage facilities in the United States. All the factors contribute to cost: When it’s heating season due to cold during the winter in the north, demand for propane is higher. That weather can create transportation delays, causing prices to rise.
Luckily, there are ways to take control and save money. Here are some actions to take to keep your overall propane costs down:
– Keep an eye on propane demand through the Energy Info Administration. There may not be a propane price forecast that’s as easy to read as the weather, but keeping an eye on demand is a step in the right direction. The best time to stock up is when propane demand is low.
– Lock in a low rate with a trusted propane supplier like Paraco
– Take advantage of Paraco’s Budget Billing Program, which uses your average home propane use to calculate a consistent monthly charge
And remember that even with fluctuating prices, propane remains one of the most cost-effective energy sources. Since propane is so efficient, it takes less to achieve more, keeping costs down compared to electricity, diesel, and more.
We’re happy to answer your questions. Reach out to our customer support, and we’ll help power your life — affordably.