The price you pay per gallon of propane will inevitably be an important factor in choosing your propane company. Yet finding a good price per gallon is confusing since Internet forums are filled with prices ranging from $1 to $6 per gallon.

This section on prices aims to create a better understanding on what to look out for in propane prices per gallon, how they are determined, what factors influence residential propane prices and how to take all this into account when choosing your propane company and looking for the best propane deal.

General pricing tips

Although the average national propane price per gallon usually fluctuates around $2.40, residential propane users can expect to be offered prices between $2 and $4 per gallon if they use propane as a primary source of energy. On average, Americans spend $967 on propane each year. However, comparing suppliers is crucial since a $0.50 per gallon difference can make a $500 difference to your budget if you use over 1,000 gallons of propane per year.

Factors affecting propane prices

The truth is that propane pricing is calculated by companies on a case-by-case basis so there is no general rule. Propane prices are affected by the price of crude oil since it is a byproduct of crude oil production. They also fluctuate with supply and demand like other unregulated commodities.

At consumer level, propane prices depend on usage (higher usage usually warrants lower prices), whether the propane tank is leased or customer-owned (the latter tends to guarantee lower prices), climate (colder regions have higher average propane prices) and proximity to major supply sources (the closer the home, the lower the price).

What it means for you

Therefore, homes using propane exclusively for cooking with be offered higher prices per gallon than large homes using propane as a primary source of energy. The crucial thing to do when looking around for propane companies is to check whether company prices reflect average propane price trends and compare the prices between different dealers.

Average US propane price trends
Source: US Energy Information Administration