Understanding Propane Price Changes
Why Have Propane Prices Gone Up?
These days the cost of just about everything is a lot more. Dealing with these higher costs can be frustrating and scary at times. You can take comfort in know that even with high fuel costs, propane is still one of the most cost-efficient ways to heat your home and run your appliances, not to mention meet your business propane needs so things keep running smoothly.
Propane Price Changes Are More Moderate than Oil
In the last year you may have notice the price swing trends with propane tend to be less when compared to heating oil, and other fuels like crude oil. The reason for this is because propane is a completely domestic form of energy. The U.S. exports about twice as much propane as the rest of the world than we use ourselves.
While propane is price in the world market just like oil, the abundance of domestic North American supply gives us supply security and that helps to level the pricing of propane cost in the U.S. Unlike crude oil that we do produce quite a bit here, we still import much more of that which is why it is more subject to higher price spikes.
How About Supply and Demand
When you combine high demand and lower-than-average inventory the result is a common driver for increased propane prices. While you may think of the demand for residential propane is for home heating and appliances, it goes much further than just that.
The demand for propane globally has risen because of increased use as a petrochemical feedstock, the majority of which is derived from crude oil and natural gas. Petrochemicals serve as the basis of many products like plastics, paper, adhesives, and some detergents. The manufactures of these types of products are some of the largest consumers of propane.
The global demand for U.S. propane has continued to remain steady even with higher U.S. prices because the international prices of propane and other feedstocks have also gone up.
Other Factors That Influence Price
There are factors that also come into play that influence the price of propane and those include, proximity of supply, transportation bottlenecks, energy policy, and manufacturing trends. In recent years these issues and played a bigger role:
- 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 To Expect?
To be honest nobody really knows where things will go from here. While things seem volatile, some people are under the misconception that when prices rise, we make more money. Actually, the opposite is true. People cut back on propane usage. We must pay our suppliers promptly. It can become a real mess for everyone.
The one thing you can count on is the fact Country Propane won’t let you run out. We have been in business for a long time and have strong relationships with our suppliers. Nothing would make us happier than to see prices start dropping. Until that happens, trust in us to be there for you and your propane needs from 20 lb. tanks for grilling, to larger propane supplies for heating and run your home, and your business.
