Why are Propane Prices Cheaper in the Summer?
Summer is here so it’s a good time to discuss this theory. If you have been a propane customer for a few years I am sure you have heard this once or twice. Although there is an exception to every rule, this one seems to hold up pretty well. Customers who are able to fill up their tanks during the summer save significantly. Why is that?
Reason #1: Supply & Demand
Propane is produced all year but demand peaks during the winter months. Especially in the Northeast states like Maine, Connecticut and New Hampshire. As temperatures drop, heating demands get stronger, putting upward pressure on L/P gas price. Connecticut Propane Prices for example, have peaked in January over the past few seasons.
Reason #2: Summer/Winter Allocation
L/P Dealers need to make summer deliveries to build an allocation of product for winter months. In order to make those summer deliveries the propane dealer must be willing to have a smaller profit margin. Therefore, L/P Gas prices cost less in the summer.
Reason #3: Ease of Delivery
Winter brings L/P Gas Dealers all kinds of fun obstacle like snow, ice and overtime! Last year New England and other areas had record snow. A propane delivery takes much longer in snow, ice and sleet and therefore, over time of drivers goes way up. In order make up the added costs to deliver, companies need to increase the price of gas per gallon slightly.
Is it set in stone that prices will always be lower in the summer? The answer to that is unfortunately no. Many other factors impact the price per gallon of L/P Gas. Over the long run though, you will get be able to lower overall heating costs by routinely topping off the tank in the summer months.