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Understanding Propane Price Changes

Why Have Propane Prices Gone Up?

propane costs pennsylvaniaWhile dealing with higher propane prices can be frustrating and downright painful at times, try to take comfort in the fact that propane remains one of the most cost-efficient ways to heat your home and fuel your appliances. Propane does all this while reducing carbon emissions at the same time.

Plus, historical trends have shown us that, when it comes to prices, what goes up must come down. It’s just a matter of when. For all of us, the feeling is, the sooner the better.

Propane Price Swings Are More Moderate than Oil

You may have noticed price swing trends with propane tend to be more moderate compared to heating oil, gasoline, and other fuels derived from a barrel of crude oil.

This is because propane is a completely domestic form of energy. The U.S. actually exports about twice as much propane to the rest of the world than we use in our own country. 

Even though propane is still priced in the world market like oil is, this abundance of domestic North American supply gives us supply security and helps moderate the pricing in the U.S. 

In contrast, crude oil, while we produce a lot of it here, is still an imported product, which leaves it subject to higher pricing spikes.

Supply and Demand

The combination of high demand and lower-than-average inventory is always a common driver for higher propane prices. While you may just think of propane demand for home heating and appliance use, it goes well beyond that.

As an example, global demand for propane has risen because of its increased use as a petrochemical feedstock, the vast majority of which are derived from crude oil and natural gas. These petrochemicals serve as the basis of many end products, including plastic, paper, adhesives, and detergents. Petrochemical manufacturers are the largest consumers of propane.

Global demand for U.S. propane has remained steady despite higher U.S. prices because international prices for propane and other feedstocks have also increased, according to the Energy Information Administration.

Other Factors That Influence Price

Long-time factors that have always influenced where prices go include proximity of supply, transportation bottlenecks, energy policy, and manufacturing trends. More recently, these issues have also come into play:

  • The actual cost of delivering fuel has risen.
  • New expenses have occurred because of covid-19 related workforce issues.
  • Supply chain problems have caused shortages, resulting in shipment delays, and inflated prices for supplies, parts, tanks, and other materials.

What’s Coming Next?

Truth be told, we don’t know exactly where things will go from here.

Amongst the volatility we’re all seeing, some people are under the misconception that when prices do rise, we make more money. The opposite is true. People cut back their propane usage. They have trouble paying their bills and our receivables skyrocket. Meanwhile, we must pay our suppliers promptly. It becomes quite a mess for everyone involved. 
  
One thing you can count on is that we will not let you run out. We have been in business for many years and have very strong relationships with both our suppliers and financial institutions.
  
If you have having trouble paying your bill, please talk with us before it becomes a problem. Many times, we can work out something to give you more time. It’s also a great time to explore our payment plan options, such as our monthly payment plan.  
  
Ultimately, nothing will make us happier than when prices start dropping. Until then, trust us to continue to look out for you.