Buying or renting a propane tank

When moving into a home where propane is an important source of energy (for indoor space heating or swimming pool heating, for example) you will need to decide whether to buy a propane tank or lease one from a propane company. More than two thirds of American propane users rent their propane tank from a propane company and between 25% and 30% are propane tank owners.

 

Advantages

Disadvantages

Recommendation

Buying a propane tank

- You are free to buy propane where and when it is cheapest.

- Installation is included in purchase price and maintenance can be included with some retailers.

- Initial cost ($450-3,500 depending on size and whether it is above- or underground).

- Propane companies are unlikely to sell you a propane tank without asking you to fill it with their propane.

Request quotes to ensure your propane company not only installs your tank but includes some maintenance.

Renting a propane tank

- Much cheaper in the short term ($25-250/year).

- Installation, fittings, inspections, maintenance and customer care are included in your propane supply agreement.

- You are forced to purchase propane from a single propane company for the duration of your contract (usually between one and three years).

- Propane is slightly more expensive per gallon.

Request quotes to ensure that beyond tank installation you are offered a fair price on propane per gallon.

Buying or renting a propane tank: basic cost information

Buying and installing an aboveground propane tank will cost you between $450 and $2,500, an underground propane tank between $1,800 and $3,500 and purchasing a used tank on the Internet will come to between $0.75 and $1.25 per gallon capacity (so between $75 and $1,875). When you rent a tank from a propane company you will be charged between $25 and $250 per year (with an average commitment period of three years). Therefore, renting a propane tank is considerably cheaper than buying one.

Propane tank costs depending on the size of the tank you are buying or renting. Propane tanks typically come in 100-, 200-, 500-, 1,000- and 1,500-gallon sizes. The average four-bedroom home will require 500 gallons to fuel a home where propane is the primary source of energy. However, propane tank size requirements depend on a number of factors such as location and climate, number of occupants, propane appliance load, home isolation, etc.

Whether you buy or rent a propane tank it is essential to know exactly what you are paying for (request a detailed invoice to know what each item costs) and be aware that propane tanks require permits (valid for the life of the tank and mostly required when buying a tank; permits range from $25-50) and, depending on where the tank is installed on your property, installation costs might increase to include extra copper piping and fittings ($1-2 per foot).

Renting a propane tank

Most American residential propane users (around 70%) decide to rent a propane tank from their propane company. This is the most cost-effective solution if you are staying in a home for three to five years. However, propane companies tend to lease propane tanks only to customers who are credit worthy and will use a certain amount of propane (at least three propane appliances).

Renting a propane tank is a simple option because most propane companies include installation and servicing costs (but piping, parts, etc. are bought by the customer). This means that you have one number for all your propane queries: that of your propane dealer. Whether you need a propane delivery, a leak test or maintenance for one of your propane appliances, it can be convenient to go through the same entity. This is especially true for propane (as a safe but flammable gas, it is reassuring to know that the technicians who are at your disposal are qualified and reactive).

However, renting a propane tank from a propane dealer also implies that you cannot choose a different propane company for each propane delivery. Indeed, in almost all areas it is illegal to have a propane dealer deliver propane in a tank owned by another propane company (with fines as high as $10,000). Therefore, before renting a tank from a company it is essential to find out what they offer in terms of propane price and other fees. You can do this by comparing quotes from different propane dealers.

Renting a propane tank often requires a commitment in time. Most propane companies will ask you to sign an average propane supply agreement of three years if they lease you a propane tank, on top of the annual rental fee mentioned above. Unlike propane use from cylinders, propane companies do not require deposits but will charge removal and fuel recovery fees if you terminate your contract early.

Buying a propane tank

Buying a propane tank is expensive in the short term because of the high initial purchasing and installation price but can be cheaper in the long term since you are able to buy propane from the dealer that offers the best price per gallon when you want or need gas.

Most propane dealers will also sell you a propane tank, install it on your property and connect it to your propane appliances. This is useful given the regulations surrounding propane installations (propane is a safe but flammable gas) and the safety risks you take if you install and connect a propane tank yourself. However, most propane companies will not sell and install a tank unless you fill it with propane. It is also possible to purchase your propane tank from a specialized tank manufacturer.

When buying a propane tank you will have to conform to federal and state regulations regarding distance rules between the propane tank and nearby structures, yard line (which connects the tank to your home) material requirements, and other safety regulations and guidelines. This is why it is recommended to go through a propane company when purchasing a propane tank: once you have been advised as to what size tank you need, their qualified service technicians will deliver, install and service your propane appliance system, including your propane tank.

Buying a propane tank also frees you from having to order propane from a single company. Therefore, owning a propane tank enables you to look around for the best propane price when you need or want to fill your propane tank. For instance, you might decide to purchase propane in summer as you plan your winter heating expenses to take advantage of low propane prices (they rise in winter since more people need propane). Also, if you buy a propane tank, it is part of the price at which you will resell your house.

Just as it is useful to compare propane prices before having your propane tank filled, you should request quotes from different propane and tank companies when looking to buy a propane tank. This will enable you to select the company that offers not only the best price but offers good service options in your area. Given the high price of propane tanks some companies also offer credit facilities.