Propane Gas Prices, Why Do They Change?
Propane gas is a popular choice for heating your home, but at times propane gas prices can be very volatile. There are ways for the user of propane gas to save money by watching gas price trends and by timing their tank fill ups. Propane prices can change quite a bit from month to month if not from season to season. Let’s exam why propane prices change.
Propane is derived from crude oil refining and natural gas. Propane gas is a propane tankby-product of these two energy sources. Since it is a by-product, propane prices will generally follow the price movement of natural gas and crude oil. Since crude oil is the largest traded commodity, it is easy to track its price. Crude oil futures are traded in the New York Mercantile Exchange. Newspaper and Internet services track and report crude oil prices and natural gas prices daily from the exchange. This will make it easy for you to following the price trends.
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Your location will affect the price you pay for propane. A majority of propane gas in the United States is stored in Mont Belvieu, Texas. Propane prices are generally cheaper in the Midwest as compared to the rest of the country. Transportation costs will increase the price you pay for your propane locally.
Supply and demand plays a major role in determining the price of propane. Take a page form economics 101. Price spikes can and do occur if there is severe cold weather in the area. Propane is produced year round, but if there is a cold snap, demand can suddenly rise and cause prices to jump. To increase supply, companies would need to import propane, but it could be several days to weeks before shipments would arrive to meet the demand.
So what is a homeowner to do to save money buying propane? First of all, find a reputable dealer. You can check with your local Better Business Bureau to see if there have been any complaints filed with the dealer. Secondly, start following crude oil and natural gas price trends. If you see prices rising or falling there, current propane gas prices will probably do the same.
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