Propane is a cost-effective fuel for HVAC systems and home appliances, but it is subject to market influences like all fossil fuels. If you notice your home energy bills fluctuating, you may wonder what is causing the price to change. The following factors are common reasons for a shift in pricing.

4 Typical Causes of LP Gas Price Changes

1. Natural Gas or Crude Oil

Propane, or LP gas, is created as a byproduct of crude oil, primarily, and then natural gas. As the prices of these commodities fluctuate, they naturally affect the price of propane. Gasoline and LP gas prices are not necessarily linked, as propane can be stored, which affects supply levels. Gas prices may drop as LP gas costs stay the same.

2. Supply & Demand

Like most goods, LP gas is affected by the market forces of supply and demand. Long winters and extreme cold snaps can cause the cost of LP gas to rise. Propane can be stored, which means that local and national inventory levels can influence pricing along with demand. In summer, LP gas use in technical industries may rise, offsetting the drop in consumer need. This means that propane levels may stay fairly even through spring, summer, and fall.

3. Proximity to Supply

The closer your local energy company is to a national distribution source, the lower prices will be. Transportation and storage costs are often passed along to the consumer. If the stock doesn’t have as far to travel, it will be reflected in the market costs. 

4. Local Factors

Local dealers must follow federal, state, and local requirements for storing and selling propane. This can include licensing fees, Occupational Safety and Health Administration (OSHA) and hazardous waste compliance training, employee background checks that are required by the FBI, anti-terrorist and emergency plans and training, as well as other fees. As administrative and supply costs rise, so will prices.

Owens Energy, in Show Low, AZ, carries tanks, products, and accessories and delivers propane fuel. They offer emergency services to Southern Apache and Navajo counties. Call 928-537-8900 for information or if you suspect a leak in your home. Visit the website to learn more about the uses and benefits of LP gas.