What is the Price of Propane?

September 4, 2019 –

What is the Price of Propane?

 
Customers are often mystified by how propane companies arrive at pricing points.  In this article, we’ll try to demystify this complex process, since how much you pay for propane is based on a host of elaborate and intertwining factors; including but not limited to:

  • Changing market conditions
  • Estimated annual usage
  • Insurance
  • State and federal regulations
  • Cost to deliver it to you

Propane, a commodity refined from other commodities, is traded on a worldwide market; and its pricing can fluctuate greatly depending on economic, political, climate and other factors. Because of these ever-shifting elements, propane companies often struggle to find the “right pricing” to ensure they can operate safely and reinvest in their business.

DEMAND   

Demand is a main factor influencing propane price.  However, while demand in one particular area may be low, it may be significant in another region. What matters is that there is demand somewhere.

For example, if temperatures in the northeast are extremely cold, propane demand will go up even if warm weather prevails elsewhere in the country because there is still a higher demand for propane in the northeast. Propane will be transported from other parts of the country to the northeast.

Texas refines and processes a vast amount of propane from natural gas which is then shipped to where it’s needed.  The weather in Texas might be unseasonably warm compared to other parts of the country, but the price of propane in Texas will rise nonetheless.  It doesn’t matter who uses the propane, it only matters that it is being used.

LOCAL, STATE AND FEDERAL REGULATIONS  

In addition to demand, other factors influence your local propane price.  Propane dealers have variable and fixed costs they must cover in order to operate their business.

Propane companies must also comply with local, state and federal requirements such as:

  • HAZMAT reporting, training and certification
  • Licensing fees
  • Employee background checks including FBI background checks on propane delivery drivers
  • DOT driver filing and reporting
  • OSHA
  • Fire safety audit and disaster response plan submissions to state and federal agencies
  • Assorted insurance coverages
  • Various compliance measures for propane tank installations that meet federally-mandated thresholds
  • As well, many local communities charge their own permitting fees

PROPANE TANK  

Other costs in the equation include whether a customer rents or owns a propane tank. Renting one may have an effect on your propane price due to the required upkeep of the tank and parts of the system.

The amount of propane delivered will affect price. For instance, the cost for the truck, the driver and other related delivery expenses stay the same whether 40 gallons or 400 are delivered.

That’s why the more propane you use, the lower the price per gallon; a principle which applies to almost any commodity.

FORECASTING 

Customers who think they can save by propane shopping and hopping need to consider the following.  Propane companies can track customer usage through computer programs specifically created for propane delivery management to more accurately forecast when users will need a propane delivery.

When customers jump from one company to another to save a few bucks, those customers’ usage history will be thrown off completely and forecasting becomes useless.  Not to mention, the cheapest price does not always imply the safest or best service. An ongoing relationship with an established propane company is an essential link in the overall picture of safety and service.

SAFETY  

Consumers should check the safety records of any propane company being considered, and ask for information about its safety practices, not just the price.  Monetary savings is often a good thing, but not at the expense of putting you and your family at risk of safety, comfort and peace of mind.

For more about propane pricing, how to read your propane bill, and potential costs and fees, please visit our Frequently Asked Questions page https://paracogas.com/faq/

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8 Comments

  1. DJ Stark on November 4, 2019 at 8:46 am

    Do you service catskill 12414

    • Isousa on November 6, 2019 at 8:00 am

      Hello DJ Stark! One of our Customer Service Associates will help you with this or any other questions you might have, please reach out to them by calling 1-800-647-4427 or by email at contactus@paracogas.com

  2. LAIRD E WORSHAM on November 17, 2019 at 1:24 am

    Simple answer what is the price of propane on this date 11/16/2019 ???????

    • lstansfield on November 21, 2019 at 7:05 am

      Hi Laird, Please call us and we will give you the current pricing.

  3. Vivian Black on January 10, 2020 at 7:23 pm

    I love how you talked about demand and how propane prices will fluctuate with the demand in your area. My husband and I are looking to get propane gas for our new home and we need to figure out how to get it delivered. We will keep these tips in mind as we search for a professional that can help us out.

  4. Faylinn on January 22, 2020 at 12:19 pm

    I thought it was very interesting that you mentioned that propane demands could go up if somewhere in the country it is colder, therefore making the price higher everywhere else. One of my sisters told me that she is looking for a propane delivery service, and asked me to help her find the right option. In my opinion, she should look online for options so she can make the right choice.

  5. gasNtools on February 11, 2020 at 12:10 am

    The post was very useful to know different factors that affects the price of propane gas cylinder. Thanks for sharing an useful post.

  6. Franklin White on June 12, 2020 at 1:04 pm

    I had no idea that a company can monitor your propane for you so you can set up schedule for them to deliver the propane. This sounds like a great way to make sure you always have propane. It would be awful if you ran out of propane but your delivery date isn’t for another couple of days.

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