What determines the current propane gas prices? When you get propane gas to use for a summer barbecue or to warm your home in the winter, how do you know if you are getting a good price? What factors determine your propane price?
First some background on where propane gas comes from. You cannot just go out and drill for only propane gas. Propane is a by-product of crude oil and natural gas exploration. Propane is produced from its removal from natural gas and after the “cracking” and refining of crude oil.
Approximately 90% of the propane gas used in the United States is domestically produced. This insures a reliable supply for home and commercial usage. Of the 10% that the U.S. imports, 70% of that comes from Canada, another stable source. Most U.S. propane is stored in the salt caverns in Mont Belvieu, Texas and propane prices are generally determined by that location. When need, propane can then be shipped either by pipeline, barge and rail cars.
Seasonal demand will cause prices to fluctuate. If your area gets hits with a cold winter, then naturally there will be an increase in demand for propane gas and this will force the price higher. Many companies that use propane gas anticipate this every year and are able to use alternative fuels so as not to increase demand and price for propane.
When using a propane dealer, you shouldn’t just purchase propane based on the price per gallon in the newspaper ad. You need to see if there is a minimum amount you will have to take in a delivery. Is that price based on signing up for automatic delivery? What other charges will there be to receive your gas?
The key to getting the best price for propane is for you to educate yourself on propane prices. Follow the crude oil and natural gas markets to see which way prices are heading. Check out the reputation of your propane gas dealer. Mostly, be aware and shop around for propane prices.