Propane Gas Prices: What Factors Influence the Price of Propane

AUTHOR: Ferrellgas

Many of our propane customers ask if there’s a chance to save money by purchasing propane at certain times of the year. It’s a smart question from our equally smart customers and one we’re always more than happy to answer. While the short answer is yes, there are opportunities to save on your propane purchase depending on when you buy, some additional context is needed.  
 
Propane prices are subject to change from one area of the country to another, so we recommend residential customers use our online pricing tool to get current, local propane prices. If you’re interested in propane pricing for commercial use, we recommend contacting your local Ferrellgas representative.  

Now, let’s dive into the average price of propane, what influences its cost, and the new-customer benefits available at Ferrellgas.

First Fill Residential Propane Price

Let’s start with our New Customer Special Pricing promotion. When you upgrade your propane service to Ferrellgas, you receive special pricing on your first fill. Pair this with one of our new customer promotions and you’re looking at some serious savings. Terms and conditions apply, of course, but our team of Customer Service Professionals are happy to answer any questions. 

Price of Propane Per Gallon 

The U.S. Energy Information Administration shows that propane prices have been hovering somewhere around $2.60 per gallon over the last three years. However, this is just a national average of residential costs, and one of our Customer Service Professionals would be more than happy to help you get more location-specific averages.  

Five Factors that Influence the Price of Propane 

We’ve discussed how prices can vary, but not why they do. Here are five factors that can influence the wholesale price of propane paid by retailers like Ferrellgas, and the retail price of propane paid by businesses and homeowners nationwide: 

Price of Crude Oil: 

Propane is one of several products of crude oil and natural gas refinement. Naphtha, which is also a refined product of crude oil, competes with propane in feed slates all around the world. When the price of crude oil changes, it makes sense that its refined products, like propane, follow suit. 

U.S. Propane Exports: 

In the last 10 years, propane exports have quickly become a major factor which influences propane prices. Overseas demand from parts of Asia, Northwest Europe, and the Mediterranean have pulled barrels away from U.S. markets. This international demand can be driven by cold temperatures, but it is also a result of countries investing in petrochemical plants to facilitate plastic production. Currently, roughly half of all the propane produced in the U.S. every year is exported. 

Propane Production: 

Like any commodity, the supply side of the equation is fundamental in determining the price. In the U.S., crude oil refineries and natural gas plants produce about 2.3 million barrels of propane per day across several major regions. Plant maintenance, natural disasters, and demand for refined products are just some of the factors that move the needle in the propane market. 

Domestic Demand of Propane:  

Depending on the time of year, propane demand comes in many different forms. In the summer, sunny days mean more people are grilling outside. In the fall, a wet corn harvest will require more crop drying. And in the winter, cold temperatures will force people to turn up the thermostat. All of these can have an impact on the price of propane. 

Weather Conditions: 

As mentioned in the section above, weather patterns drive demand and influence propane prices. However, as we know, weather can be unpredictable. For example, an increased need for propane heating is cyclical and often predictable, but increased demand after an extreme weather event (hurricane, etc.) is not. When there is a massive spike in the need for propane outside of normal use patterns, there’s a good chance that demand could exceed supply for some retailers, driving up the prices. The good news – as a Ferrellgas customer, you’ll have access to our nationwide supply network. It allows us to shift assets to meet demand, which allows us to adapt to changing weather conditions quickly. 

Pro tip: Refill Propane Tanks Early 

The best tip to securing a great price for propane? Buy early. The benefits are two-fold. For starters, it’s never a bad idea to enter the winter months with a full propane tank. This guarantees your home has what it needs to keep you comfortable all winter long. The second benefit is cost savings. When you buy outside of the typical winter-refill window, you’re avoiding possible demand-driven price increases.