Have you recently heard speculation that propane prices are on the rise?
Due to unprecedented volatility, propane prices are undergoing increases expected to continue over at least the next several days.
The fluctuating price may seem unpredictable and erratic. However, there are many circumstances and variables that are not in control of a propane supplier that causes the price to increase.
Below are some factors that affect propane usage:
- Crude Oil and Natural Gas Prices: Propane is a byproduct of crude oil refining and natural gas processing. Propane competes with other crude-oil-based products and there are many fluctuations in the pricing of crude oil. This is reflected in the wholesale propane price.
- Supply: If your propane supplier is receiving intermittent propane deliveries, it has to delegate when and how much propane to sell throughout the year. The amount of propane made throughout the year also depends on several factors, like the weather at the propane extraction location. Being that it is halfway through the month of February and most customers have already used 75% or more of their “predicted gallons,” the predicted gallons supply estimate is inaccurate creating a supply issue.
- Demand: Propane consumers’ demand is probably the most significant factor that affects propane pricing. Propane is in much higher demand in the winter because it’s needed to warm homes. It’s necessary to increase the price during higher demands because the supply goes down with higher demand. This is an expected fluctuation during the winter seasons.
- Delivery: Delivery is a smaller factor but still one to consider. In the winter, for many parts of the country, there is inclement weather. If there are large amounts of snow, ice, or high winds, it will affect your propane supplier’s delivery capabilities. Your supplier may not be able to complete as many deliveries or may have to pay employees overtime to get all the deliveries done.
- Weather: Propane prices spike when there is prolonged cold weather. This is because of supply and demand, and cold weather can slow production, creating a smaller supply from which to pull.
Despite all these variables, Foster Fuels strives to offer fair and competitive pricing. With over 100 years of service in the industry, Foster Fuels has an expert team of buyers who have learned how to read the market and buy at the best times to get the best value for its customers. The price of propane is an ever-changing market, but you can rely on Foster Fuels’ constant, reliable and exceptional customer service. Contact us today to learn more about our services!
