What Factors Govern Residential Propane Prices?

Posted by ThompsonGas on February 10th, 2016

Many factors can affect propane prices especially for residential use. Some factors affect the prices of all petroleum products in general, while some affect only propane. The price of propane for the residential market is typically influenced by competing fuels, the suppliers, amount required for the home, and the distance it has to travel to reach customers. Here is a more detailed look on the factors that can govern residential propane prices:

Prices of Natural Gas and Crude Oil

Propane is a byproduct of natural gas processing and crude oil refining, but the latter is often the factor that influences its price the most. This is because it competes mostly with other fuels that come from crude oil.

Demand and Supply for Propane

Inventory levels, weather, and domestic production are some of the factors that can affect supply and demand for propane. Production may not be seasonal, but the residential demand is. Hence, most suppliers typically have more propane in the summer than in winter when more homes require heating. This is why it is important to sign up for a propane service from a reputable company that keeps a consistent supply of propane throughout the year to avoid paying for higher prices when demand increases.

Cold Weather

Residential demand for propane is typically influenced by weather conditions. Hence, more homes are likely to need propane to fuel their heaters when the weather becomes colder than normal. Propane prices may spike during winter because of the high demand and low supply. However, there are suppliers that can provide a 'never run out' guarantee with their delivery plans to make sure that you have enough propane at home.

Proximity of the Source to Your Home

Transportation costs can increase the price of residential propane. Hence, it is best to get propane from a local supplier that covers your area. Reputable local propane suppliers are flexible and buy more propane in the summer or spring when prices are low, so they can pass the savings on to you.

The Supplier

It is crucial to buy propane from a reputable service provider to make sure that you can save money in the long run, while ensuring reliable services that can cover 24/7 emergency assistance and repair. Consider signing up for a level monthly plan for the entire upcoming year, but make sure it is adjustable based on the actual gas price and your actual usage.

About the Author:

This article was written by 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 affordable propane for residential and commercial propane gas service to customers across 10 states in the East and Southeast.