Delivering Cheap Propane

Posted by ThompsonGas on June 20th, 2014

Propane also known as liquid petroleum gas is the most versatile sources of energy and fuel. It is not only used for back doorbarbeques but has a variant of other uses, including powering water heaters, dryers, ovens,stoves,forklifts and refrigerators.

As costs of other sources of energy such as gasoline rise, so does propane costs, though it is relatively cheaper than gas and gasoline. The price rises are as a result of fluctuations in supply and demand equilibrium. As the demand for propane increases, the prices also go up because propane is produced in a steady rate year round by refineries and gas processing plants.

In recent times, more people prefer propane to other energy sources for three reasons;

Increased comfort: propane delivers more comfort than electricity, a propane furnace heats faster and warmer than an electric heater.

Increased value: Propane furnaces have advanced controls and new features for safe and efficient operations.

Less pollution: Propane is a clean fuel for home use and less harmful than wood, heating oil or coal.

Propane prices are actually a function of the market and demand though there other factors that a company factors in, including overheard costs and insurance costs. Since propane prices are not government regulated,suppliers are responsible for setting their own prices. For competitive reasons, a company should deliver cheap propane to attract and retain clients while still making profits at the same time.

One strategy to use to be able to deliver relatively cheap propane is the use of different delivering strategies for the different types of customers. It would seem that there are fewer propane filling stations in some locations and use of delivery strategies by propane suppliers to deliver it directly to clients’ homes would be cheaper. Exchange and delivery of propane tanks are quicker and easierfor the customer than incurring extra transport costs to get the propane tanks. The delivery strategies include:

  1. Off route propane delivery or special delivery charge, which is the minimum amount a customer, would have to pay for delivery during normal hours.
  2. Emergency delivery charge whereby a customer requests a delivery after normal business hours, the charge for this would be slightly higher than the special delivery charges.
  3. The automatic delivery charge is for consistent and predictable customers who want to control their delivery. It is based on known and estimated propane consumption. Clients who pay the automatic delivery charges may at times be saved from the propane price fluctuations this is because; it makes it possible for the supplier to pre-budget for them. In some cases, companiesusually give discounts and fixed prices for regular customers.

Clients should time their propane delivery during summer months when the costs are typically lower and if possible, they should purchase as much as they can afford to do so during lower demand periods. Propane Companies wishing to gain competitive advantage over their rivals should at such times offer discounts for customers doing bulk purchasing. This will enable them to gain from increased sales volumes as the demands and supply at such times are usually at equilibrium.

About the Author:

This article was written by Krista Scarlett, communications specialist for ThompsonGas. The 16th largest retail propane company in the U.S., ThompsonGas has been family owned and operated since 1946. The propane gas dealer provides cheap propane for residential and commercial propane gas service to customers across 10 states in the East and Southeast.

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Joined: February 12th, 2013
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