So, you have finally decided to use propane as a source of energy in your home or business. Well, kudos for taking that bold step, but now you have to understand how much the price of delivered propane is. The cost of propane fluctuates during the year due to several factors. Before we delve into the price, we will be looking at those factors that cause the price of propane to fluctuate.
Factors affecting propane prices
The weather directly affects propane consumption due to the need for heat production. In months where there is winter or fall, generally around September to March, the need for propane will rise. Also, if any natural disaster cuts propane production for a while, the supply will be affected, and the price will also change.
2. Price of crude oil and natural gas
If you don’t already know, propane is obtained from crude oil and natural gas, and as such, the prices are directly affected by their prices. For instance, if any policy issue or problem affects the price of petroleum or natural gas, like the problem in Ukraine and Russia, the prices of propane will equally rise to compensate.
It is important to note that most propane in the United States is obtained from natural gas and thus has a higher effect on the price of delivered propane.
3. Demand and supply
This factor is basic economics; the price for propane may increase as the demand increases. The reason for this can be because of the change in weather. During the colder seasons of winter and fall, more people will demand propane, and as such, the supply may become shortened, and prices can skyrocket.
Also, if an industry issue such as policies affects propane supply, the demand will be affected, leading to changes in price.
4. Supply chain
The production chain for propane is quite long. Sometimes it is imported into the United States from other North American countries. After it is imported, it has to be processed, then transported, and stored. Then when it is stored, suppliers from across the country come to get it. All these processes affect the price because they all add to the accrued cost.
5. Importation-exportation balance
The United States imports propane from Mexico and Canada as well as exports it to countries like Japan. So, if something happens that causes the exportation to become way more than importation, the price will shift to accommodate the change in supply.
How much does propane cost?
The typical price range for propane per gallon is from $3 to $5, and the price to deliver it costs around $10 extra. However, this is just the cost of propane itself; the propane tank can cost from around $100 to $5000, depending on the size you want.
When is propane cheapest?
The best time to stock up on propane is during early fall. At this point, the weather is more reasonable and predictable, so you will not have to worry about the price of delivered propane being hiked by sudden weather changes, like a snowstorm.