A propane tank out in the snow

As a homeowner, you rely on propane gas to heat your space and keep you and your family warm and cozy year-round. However, not knowing why or when propane prices go up or down can make it difficult to create and stick to a budget.

Propane fluctuates less than some foreign oils. However, its price can still change throughout the year, so it’s important to be aware of some contributing factors driving the costs. Luckily, there are distributors who understand how to read the market so you can get the best possible price on propane.

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What Drives Propane Prices?

While the cost of propane is influenced by the price of crude oil, the overall supply and demand for propane drives the cost. Distributors purchase large quantities of propane. Then, depending on the supply, the market price will vary. The supply is affected by several factors, ranging from inventory levels to how strong the export market is. If a propane supplier has limited quantities of propane, they will have to raise the price.

Similarly, the demand for propane will affect its cost. Factors like current economic conditions can significantly impact the amount of propane used. Additional variables, such as the availability of other fuels like gasoline, will also affect the price of propane. It’s also common to see a difference in demand depending on the time of year. As the demand increases, the supply decreases, causing suppliers to raise the price.

Understanding these fluctuations and trends can help you better predict how much you’ll pay throughout the year.

What Affects the Price of Propane​?

The overall supply and demand will have the most significant impact on the wholesale price of propane. However, several other factors can play a role, including:

  • Weather: Weather is one of the biggest contributing factors to wholesale propane prices. While there can be exceptions, the price tends to increase when there is cold weather due to supply and demand. The more propane needed to heat homes, the higher the price will be to keep up with the demand.
  • Transportation and delivery: The transportation and delivery process can also impact the price. Uncontrollable factors such as inclement weather can negatively affect transportation, causing delays in getting deliveries to their final destinations. When this happens, suppliers may need to pay their employees overtime, which will increase the price of propane.
  • Crude oil and natural gas prices: Because propane is a by-product of natural gas processing and petroleum refining, its price will fluctuate anytime the price of crude oil increases or decreases. This can be especially notable during the winter months.
  • Exports: Propane is exported to other countries, which can also impact the cost. If the availability of propane decreases because more of it is being exported to other countries, the price will increase for domestic consumers.

How Does Propane Compare to Other Heating Fuels?

While propane is most often compared to natural gas, there are some notable differences between these two common methods of heating homes. Both are fossil fuels, but propane is usually delivered to a storage tank at the home while natural gas is delivered to homes through a pipeline.

While both are clean sources of energy, propane produces lower amounts of pollutants and has a smaller carbon footprint than natural gas. This makes it a great option for homeowners who want to make environmentally friendly fuel choices. Overall, propane is a more stable, efficient and cost-effective solution for heating homes.

There is also a difference in how the prices are measured. Natural gas is measured in price per cubic foot compared to propane, which is measured in price per gallon. Because of this difference, it can be more difficult to make an even comparison without considering other factors like your location and your heating system’s efficiency.

When Do Propane Prices Go Down?

Though propane prices do fluctuate, there are certain times of the year when you can expect lower costs. Because homeowners use their heating systems less in the summer, the demand for propane decreases, resulting in a lower energy bill.

You’ll still likely use propane to power some appliances, such as your oven, outdoor lighting or pool heater, but the usage will be more sporadic. Even if propane prices increase during this time, they will likely impact your energy bill less compared to the winter months when you’ll consistently use propane to heat your home.

How to Save on Propane Fuel With Tax Credits

If you want to take advantage of propane’s reliability and environmentally friendly benefits, several incentive programs and credits are available to help you save. Some examples include:

  • Propane Powered Vehicle: Vehicles that primarily run on propane instead of traditional gasoline or diesel are considered alternative fuel vehicles (AFVs) and qualify for an exemption on each gallon.
  • Alternative Fuel Vehicle (AFV) Tax Reduction: Local governments in Virginia that depend on vehicles that use propane or another type of alternative fuel can take advantage of the AFV Tax Reduction. This incentive will cut down how much they pay on personal property taxes.
  • AFV and Hybrid Electric Exemption for Emissions Testing: Both propane-powered vehicles and hybrid electric vehicles that meet specific EPA fuel ratings are exempt from emissions inspections and testing.
  • AFV Fueling and Infrastructure Loans: Schools that transform their buses so they are propane powered can receive funding to help cut down on their transportation expenses.
  • High Occupancy Vehicle Lane Exemption: No matter how many occupants the vehicle has, all vehicles that run on propane and have Virginia’s special license can use the state’s high occupancy vehicle (HOV) lanes.
  • Propane Powered Fork Lift: Similarly, forklifts that are powered mainly with propane can save money on each gallon with an exemption.
  • AFV Conversion Fund: With the AFV Conversion Fund, everyone from school districts to local governments can access additional funding and lower OEM AFV vehicles and aftermarket conversion costs.
  • Government AFV Incentive: Both local governments and state agencies that convert to propane-powered vehicles can receive several thousand dollars in funding.
  • Alternative Fuel Tax Exemption: If agricultural operations, nonprofit charitable organizations and government entities meet certain conditions, they may qualify for tax exemptions.

Get a Good Price on Propane When You Choose Foster Fuels

For more than 100 years, Foster Fuels has met the needs of homeowners throughout Virginia. With our high-quality fuel services, you can enjoy a warmer and more efficient home — even throughout the winter season.

Though the price of propane can fluctuate, we are committed to reading the market and choosing the best times to purchase propane so you get the best value. Along with providing fair, competitive pricing, we take pride in offering reliable and exceptional customer service.

Interested in learning more about how we can provide you with quality propane at affordable prices? We invite you to contact us today by filling out our online form.

Get a good price on propane with Foster Fuels