In 2015, the Residential Energy Consumption Survey reported that 11.8 million US households relied on propane for energy needs, with 42 million using it for outdoor grilling. Today, propane use has surged, influenced by a growing population and awareness of its benefits.
During the winter months of 2022/2023, propane usage averaged 0.986 million barrels per day, a record low due to milder temperatures. This challenges the notion that low propane demand causes this dip; rather, it’s the warmer winter that determines when you buy propane. Consequently, winter sees the highest demand for propane, raising questions about energy price wars and seasonal price differences.
Join us as we reveal the best time of year to buy propane to fill your propane tank and help you know when propane prices will go down. Discover the secrets behind lower early fall and summer propane prices and why you should buy propane during summer. Dive into the details now!
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Why do Propane Prices Fluctuate?
Propane gas prices exhibit seasonal variations, notably with lower prices in summer compared to winter. The primary driver of winter price hikes when filling up a propane tank is the heightened demand for heating. The period from October to March, marked by cold weather and frequent snowstorms, sees a surge in propane use, straining supplies.
Gas Supply and Demand
Propane follows the basic economic principle of supply and demand. Higher demand and lower supply lead to increased propane bills. Despite year-round production, the over-dependence on propane for heating during colder seasons creates spikes in winter demand. Factors like cold snaps and reduced crude oil extraction can contribute to supply shortages, driving prices higher.
Natural Gas and Crude Oil Prices
External factors, such as disruptions in natural gas and crude oil production, significantly impact the cost of filling up a propane tank. In 2022, protests in Kazasktan disrupted crude oil transport, causing a rise in fossil fuel and propane prices. As 76% of US propane comes from natural gas, any production hindrance in these sources affects propane costs and why you buy propane at a heightened current price.
Propane Supply Location
Transport and logistics costs, passed on to consumers, play a role in propane pricing. While the US extracts propane locally, a substantial amount is imported from Mexico, Canada, and the Middle East. Import-related costs, along with transportation expenses for refills, contribute to the overall price structure.
Propane production’s direct reliance on crude oil and natural gas volumes creates challenges during high-demand periods. Rapidly addressing increased demand involves intensive processes like mining more natural gas, demanding labor, capital, and time. Production limitations during the COVID-19 pandemic exemplified this, causing a sharp rise in propane prices.
Exportation Volume Imbalance
Major propane producers like the US often export to countries like Japan. However, excessive exports can strain domestic propane supply, necessitating imports and resulting in price spikes.
Unprecedented Weather Changes
Propane prices peak during the cold months of October to March, prompting users to refill tanks in the significantly lower-priced summer months. However, unpredictable weather events like snowstorms in the cold months can lead to fluctuations in LPG prices.
In essence, propane prices are influenced by a combination of propane supply-demand dynamics, external factors affecting production, supply chain considerations, production constraints, export-import imbalances, and weather-induced demand fluctuations. Understanding these factors helps consumers strategically time their propane purchases for cost-effective and efficient usage.
Summer Propane Usage Vs Winter Propane Usage
The contrast between summer and winter propane usage lies in the seasonal demand for heating. Summer sees limited reliance on propane, with intermittent activities like heating pools, outdoor lighting, and grilling. Conversely, winter demands continuous use for heating homes, making it a 24/7 necessity. Even when away, propane heating systems must run to prevent frozen pipes. Other appliances, like ovens and dryers, also operate more frequently in winter. The key difference is the frequency of propane usage – sporadic in summer for non-essential activities and constant in winter for essential heating, illuminating the seasonal shift in propane consumption.
Cheapest Months to Buy Propane
The best time to purchase propane is early summer (before early fall) when demand is low. Stocking up during this period is cost-effective and convenient as fewer people require gas in the summer months. While not every summer guarantees low prices due to increased RVing activities, those who miss deals in summer months can still benefit between late September and early fall.
Early Fall Advantage
- Demand remains low, with temperatures set to hit record lows, resulting in significantly lower current price.
- Unaffected by summer RVing or winter stock-ups, this period offers optimal pricing conditions.
- Exempt from late autumn cold snaps, it prepares consumers for the upcoming coldest months.
Why Propane Costs Less in Summer
- Propane prices drop in summer due to low demand. Non-essential summer uses, like filling up a propane tank for pool heating, allow for flexibility.
- Unlike winter, where heating becomes essential, summer activities, such as sparingly heating houses, contribute to reduced demand.
In essence, strategic propane purchases during early summer or the specified fall window ensure cost savings and readiness for the winter heating season.
Propane gas demand is pegged on numerous factors, but primarily, it is all pegged on the current demand against the available propane supply. But you can always stay ahead of the pack by getting your propane gas supplies available before the cold months when the demand is so high and so are prices.
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