10 factors that affect propane cost per gallon

Our delivery drivers and energy specialists are often asked: what is the current propane cost per gallon? We can answer that question pretty quickly, but the harder question is: why does propane cost per gallon fluctuate so much from month to month?

While weather and time of year are familiar factors that influence the price of propane, we wanted to break down a full list of local, national, and international factors that influence prices. Of course, PepUp Promise Plan customers won’t have to worry about changing fuel prices, but for month-to-month customers, it’s helpful to understand what can impact your home energy budget.

For quick reference, here are some links to propane prices in the PepUp service area:

• Want to find out what today’s propane prices look like where you are? This is today’s propane cost per gallon in Delaware, as calculated by the United States Energy Information Administration.
• Looking for current propane prices in Maryland? Check out the EIA current propane prices for Maryland, which are updated weekly.
• Virginia residents can find their propane cost per gallon at the EIA page for current Virginia propane prices. This page is also updated weekly.

10 factors that affect propane cost per gallon, locally and globally

1. Market Conditions. The top reason any product changes price is the current state of the market, which is based on the supply on hand, and the consumer demand for that supply. Other market conditions that influence crude oil products like propane include fluctuations in crude oil prices, weather conditions around the world, and global economics.
2. Weather Conditions. Extremely cold winters can drive increased demand for propane locally, which then requires propane suppliers to restock their inventory at prices that are usually higher in the winter months.
3. Inventory Levels. As propane demand increases, especially during the winter, supplies are depleted and must be restocked. In the summer, demand for propane remains more predictable and slow. Higher inventory levels equate to lower prices in a typical Mid-Atlantic summer.
4. Crude Oil Prices. We mentioned crude oil prices as a driving force behind market conditions, but it’s also an independent cause of fluctuations in the cost of propane. Rising oil prices, or demand for crude oil products other than propane, can impact the cost of propane for suppliers and their customers.
5. Export and Import Demand. Going back to market conditions and the forces of supply and demand, it’s important to remember that propane is a clean-burning fuel that is traded globally. Supply chain disruptions, increased global demand, and imports can affect domestic propane supply and prices.
6. Production and Refining Capacity. Propane is produced at crude oil refineries, and if a refinery is unable to process crude oil due to an equipment failure or supply chain disruption, propane reduction is limited until that refinery is back online. That can limit global supply projections and lead to increased prices.
7. Natural Gas Prices. Since propane and natural gas serve many of the same homes and business heating and energy needs, rising natural gas prices have an indirect effect on the price of propane as demand increases from consumers switching to propane.
8. Regional Factors. Many parts of the country have higher propane prices than others, simply due to a lack of local transportation and storage infrastructure. Luckily, PepUp customers benefit from geography when it comes to regional propane supply infrastructure. Propane storage facilities that serve the Mid-Atlantic region and the Southeastern U.S. house 55 percent of the nation’s propane. This wealth of LPG supply and infrastructure makes it possible to restock PepUp storage tanks efficiently so we can provide the best propane prices for our customers.
9. Market Speculation. Propane is a commodity that can be traded in commodities markets. Investors and traders sometimes speculate on future propane prices, a practice which can have an impact on current propane cost per gallon.
10. Government Regulations. As the government requires that refineries and transportation providers comply with new environmental policies or taxes, the result is costs that are passed on to suppliers and consumers.

PepUp’s Promise Plan eliminates some propane price surprises

PepUp customers tell us what they value most about The Promise Plan is that it’s a way to keep prices stable, no matter what’s happening in the rest of the world. Learn more about how to enroll in The Promise Plan and keep your home propane tank filled, without any surprise price increases that could affect your home heating budget.

Questions about the current propane cost per gallon? Ask our energy specialists.

You can always call PepUp with questions about the price of propane, and ways to make propane delivery more economical and worry-free for you and your family, farm, or business. Anytime you need answers about propane, we’re here to help.