What Factors Affect Current Propane Prices

Posted by ThompsonGas on June 20th, 2014

Propane Prices are constantly fluctuating as they are not typically subject to any government intervention. Propane consumers need to understand the reasons for the changes as it affects their daily budgets.Propane, which is, liquefied petroleum gas that is mixed with natural gas and oil has become an alternative source of energy for a number of families. It can be used for heating homes, drying clothes, heating water, fueling gas fireplaces and even for backdoor barbeque grills.

With this increased use of propane its demand increased meaning an increase in prices. Propane consumers should avoid being overcharged by researching and becoming aware of the propane price in the market. Consumers need to identify a propane supplier in their respective areas that will ensure they have access to cheap propane.

Propane prices just like any other petroleum products are subject to a number of influences, including: the demand and supply of propane, the current prices of crude oil and the distance the propane needs to travel to reach its final consumer.

Current propane prices like most marketable fuels are a reflection of the current prices of crude oil. Crude oil and natural gas processing are the main raw materials from which propane is manufactured. Crude oil prices are affected by the global markets, which are constantly fluctuating as a result of demand and supply fluctuations.  The cost of raw material used to make a product directly impacts on the price of the final product. It is important to note that even though propane comes from crude oil, it is a direct competitor and therefore its prices directly impact propane prices.

Supply and demand is another factor which influences current prices of propane. If there is an increase in demand of propane the prices go up. Propane supply and demand are subject to seasons, domestic productions of a region and inventory levels. Propane usage varies according to the season. During winter there is a higher demand as compared to summer seasons. Consumers who need cheap propane need to make use of seasonal variations in prices. If a consumer stocks enough propane fuel in summer to takethemthrough the winter, a considerable amount of money is saved.

When supplies are low, there is no quicker way to increase production produced by a refinery, as propane is produced year in year out. This means that the propane retailers and supply have to dig further into their pockets, they will then pass this increase along to their customers.

The physical location of a consumer and the close proximity of the supplier are other determinants of the current propane prices.  A consumer who is located close to a propane supplier pays less than a customer who is located far away from the supplier. The transportation cost factored in is the reason why a farther customer will pay more.

Customers are usually affected whenever there are price spikes. Though they do not have control over the factors causing the hike, there are a number of steps they can take. A consumer should ensure the appliances are working properly and not use excess propane. They should also provide regular tune-ups on the water heaters and ovens.

About the Author:

This article was written by Krista Scarlett, communications specialist for ThompsonGas. The 16^th 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.