Why Are Propane Costs Rising?
Get Some Insight Into What’s Going On in the Marketplace
Every time we open our wallet or checkbook lately, we seem to be spending more and more for what we’re getting—whether it’s groceries, electronics, gasoline, and countless other commodities. Unfortunately, that’s also true of propane. Propane prices are rising as we head into heating season here in Western Pennsylvania. In fact, propane prices are at their highest levels since 2014.
Right now, the costs of all kinds of energy are on the rise:
- The price of gasoline has risen by more than $1 per gallon in the last year.
- Natural gas prices have increased by over 150%.
- Heating oil prices are up by more than 57%.
- Because power generation is heavily reliant on natural gas-fueled power plants, electricity rates are increasing.
- The price of crude oil is more than $80 per barrel, a level we haven’t seen since 2014.
People sometimes misunderstand how negatively all this impacts us, as well. We don’t make more money when prices rise like this; we make less. Think of it this way: it’s like when the cost of coffee, milk or oranges rises. It’s not the local grocery that is profiting—that’s left to the Wall Street investors behind the scenes. Our customers have a harder time paying their bills. They reduce expenditures. We need to tap into our lines of credit more. Our phones light up with questions. Simply put, the sooner energy prices drop, the happier we’ll be.
Rest assured however that ProGas is doing all we can to keep our propane pricing as low as possible for each and every one of our customers in our Western Pennsylvania, Northern Wester Virginia, and Eastern Ohio service territory.
What Determines Propane Pricing?
How much you pay for propane is determined by several complex, changing factors.
Propane is created from commodities that are bought and sold on the world market. Natural gas accounts for around 70% of propane production, with crude oil accounting for the rest. Propane prices can change suddenly because of unforeseen events, which is why they are as unpredictable as they are.
Some of the factors that influence propane prices can include:
Supply and Demand. Demand for a commodity can cause a wide range of fluctuations in the price. If the winter is harsh and lengthy, prices will rise. The increase in propane exports to satisfy global demand may have an impact on our national supply of propane. Propane prices also vary based on the season and production and inventory levels. That last one is another incentive to use us to fill your propane tank in the late spring and early summer months, otherwise known as the “shoulder seasons.”
Weather. Extreme temperatures and bad weather might have a detrimental influence on propane generation, causing a scarcity of propane, which raises prices.
Current Events. Propane prices are determined by a variety of factors both local and global. Oil spills, pipeline failures, ransomware assaults, natural disasters affecting fuel refining and distribution centers, international conflicts, and OPEC production levels are all examples of events that can influence your propane costs. The COVID-19 epidemic has disrupted the supply chain for numerous sectors in the United States, including propane.
Proximity of Supply. The cost of propane will nearly always be lower the nearer you are to a major distribution center.
Need in the Marketplace. In the winter, when people require propane for home heating, they frequently pay more for it. When propane-fueled vehicles and equipment are used in commercial settings more often, peak demand in the commercial sector occurs during the summer months.
If you’re struggling with your propane costs, don’t let worry or pride get you in over your head. Contact ProGas before you fall behind and we’ll do everything we can to help work out a solution. We thank you for your understanding and we appreciate your loyalty. As we’ve done quite a few times in the past, we will get through these tough times by all working together.