Propane facts

What do you need to know about propane? Bascially, that propane is a useful source of energy for many home appliances, that it is safe, that it is relatively clean, but that you should spend some time looking around before selecting a propane company. Here are a few propane facts to help you get an accurate picture of propane, a gas used by millions of Americans.

Basic facts about propane

The first fact you need to know about propane is that it a liquefied pretroleum gas (LPG or LP gas). This means that propane is a byproduct of natural gas and crude oil production. This is an important fact when considering that propane prices depend partly on the price of crude oil, consequently.

Propane price facts and figures

You may see a lot of online complaints about propane prices. It is a bit more complicated than it looks. The fact is, propane prices depend on a series of factors. As said before, crude oil prices are one of these factors affecting propane prices. Another issue which does not depend on consumers is whether or not you are close to a major propane supply source, such as the Gulf Coast or the Midwest. A third factor you do not control but which affects propane prices is climate: people living in cold regions tend to pay more for propane gas.

But in fact, propane prices also depend greatly on your personal usage. People who use a lot of propane (say, for central heating and water heating) will pay a lower propane price than people who only use propane for single appliances (e.g., outdoor grills). It is not unheard of for people using very little propane to be offered a $5 per gallon propane price, whereas consumers who use propane as a primary source of energy will be quoted prices closer to $3 per gallon.

The graph here shows you propane price trends. This is a useful fact to know, though your state propane price is probably a more accurate representation. We have webpages on all US states if this is what you are looking for, here. Remember, however: comparing quotes is the best way to see which prices are more competitive, and that is a fact.

Source: US Energy Information Agency, 2012-2013 winter season

Facts and advice on propane tanks

Propane tanks involve three choices. The most important is choosing what size tank you need. Certainly, propane companies offer advice about this. But remember the fact that if you are using propane as a primary source of energy, you will probably require a 500-gallon or more tank capacity. If only one or a few of your appliances use propane, you will probably need a 120 or 250-gallon propane tank. Your propane tank size affects propane prices: the larger your delivery, the less you will probably pay for propane.

The second choice you will have to make is whether to buy or rent a tank. Depending on size, mainly, buying a tank will cost you between $450 and $3,500. Renting a tank is cheaper, with rental fees varying between $25 and $250 per year (or nothing at all if your propane company waives them). People with their own propane tanks pay less for propane because they are free to choose between companies (so dealers try to attract them). People with leased tanks pay a little more for propane since you have to use their propane in their tank. Bear this fact in mind when choosing.

The last choice is mostly visual: would you rather have a propane tank that is aboveground or undergound? Aboveground tanks are cheaper and although they can be hidden or painted (reflective colors only) they remain a bit of an eye-sore. Underground tanks are more expensive but you can hardly see them. You will have to decide whether the extra cost is worth it: for a 500-gallon tank, prices vary between $700 and $2,500 if it is aboveground and between $1,500 and $3,000 if it is underground. That is no small price to pay.

The facts about propane vs. natural gas and electricity

Contrary to popular belief, the fact is that propane is a relatively clean source of energy. Both the Clean Air Act of 1990 and the National Energy Policy Act of 1992 identify it as an approved clean fuel. Natural gas is also non-toxic for the environment but electricity, since a lof of it is produced from coal, is less environmentally-friendly.

In terms of pricing facts, propane compares well with electricity: at November 2012 official rates (US Energy Information Administration) somebody using 33 gallons of hot water a day for showering, cooking, doing laundry and dishwashing would save $69 a year if they used propane rather than electricity. The same cannot be said about natural gas, which is considerably cheaper than propane.