Propane Pricing Explained

July 15, 2021

Propane Pricing Explained

Propane pricing

Propane pricing is complex and fluctuates based on seasonal demand and other commodities. Propane is a byproduct of crude oil refining and domestic natural gas processing, so the price of propane falls somewhere between these two products. Also, propane competes closely with other byproducts of crude oil. Therefore, the price of wholesale propane also depends on fluctuations in the price of crude oil.

The costs for propane are traditionally less than other alternative energy sources, even with the fluctuating fuel prices throughout the year.

Propane Pricing Factors

Propane truck driving in snow in Malvern, PA

1) Seasonal Demands

Upswings in propane prices can be caused by seasonal demands. In the winter months, states that have a higher demand for residential heating (i.e. states with colder temperatures) require more propane. In the summer months, petrochemical manufacturers which are the largest consumers of propane might be in more need of propane.

The volume of propane available from natural gas processing and crude oil can not be adjusted according to how much demand there is. Therefore, the increase in demand causes the price of propane to increase along with the season. Great Valley Propane ensures that customers will not be deprived of deliveries, even in the high demand season.

2) Transportation Costs

Transportation costs affect propane prices. Generally, most propane suppliers get their propane from America’s largest storage hubs located in Kansas and Texas. The amount of time it takes to travel from storage hubs can add to the prices of propane supplies.

3) Exports

The price of propane is affected by the fact that America exports propane out to other countries. Exporting volumes of propane can reduce the amount of propane available for American consumers. This can be an issue when the heating season starts as prices can start to rise. The limited availability of propane due to exportation is one major reason why propane prices were high this past winter. Other factors that contribute to the high price of propane this past winter include higher crude oil prices.

The price and demand of propane also depends on whether it is being used for industrial or residential purposes. If there is a robust corn harvest in a growing season, then the crops need a lot of propane for drying off. This can also increase the demand and price of propane.

4) Whole House Heat Versus Specific Use

Another way that the majority of propane suppliers set their prices is based on what the customer’s tank is being used for. People that use propane to heat their whole house use the most propane and generally get the lowest pricing. On the other hand, people who require propane for specific purposes only (i.e. cooking) need less propane and tend to get higher pricing.

Great Valley Propane – Competitive Pricing & No Added Delivery Fees!Propane truck delivering to home in Malvern, PA

Since 2006, Great Valley Propane has been delivering competitively and fairly priced propane to its customers. Our experienced and insightful staff has deep relationships that allows GVP to purchase propane for competitive prices and deliver those prices to our customers on a daily basis. Furthermore, GVP offers extensive pricing options to automatic delivery customers to help keep their costs down.

Don’t wait any longer! Call us today at 610-251-2203 to talk to one of our experts and get propane delivered to your home or business!