Propane price per gallon

Propane is a liquefied petroleum gas and a byproduct of crude oil and natural gas production. It is measured in gallons in its liquid form, which is how it is stored in a propane tank. One gallon of propane amounts to around 91,500 BTUs (British Thermal Units – used to measure energy output for different sources of energy).

Propane price per gallon is a crucial element in choosing a propane company. This is made more complicated by the fact that propane prices are not regulated, which means each propane company is free to set its own (though companies aim to remain competitive). Before choosing a propane retailer it is important to understand what affects propane price per gallon.

A random enquiry into the retail prices of America's three largest propane companies (Amerigas, Suburban Propane and Ferrellgas) by this website at the beginning of March for Ohio, the US state closest to the American national average propane price showed that when it comes to a first fill in a home using propane as a primary source of energy, Ferrellgas is cheapest ($1.499/gal), ahead of Amerigas ($1.699/gal) and Suburban Propane ($1.799/gal). However, when it comes to the next fill, Amerigas is cheaper ($2.099/gal) than Ferrellgas ($2.370/gal) and Suburban Propane ($2.599/gal).

Residential propane price per gallon averages

While the US average residential propane price per gallon in November 2012 was $2.4 per gallon, the table below shows the average price difference between the two regions the US Energy Information Administration monitors.

The table below further illustrates how residential propane prices per gallon can change depending on a state in the same region.

Source: US Energy Information Administration

Crude oil prices

Since propane is a byproduct of crude oil production its retail price per gallon is dependent on the market price for crude oil. Therefore, to a certain extent, residential propane price per gallon is affected by global issues such as the political and economic situation in the Middle East, where a large proportion of crude oil is extracted.

Common factors affecting the price of a gallon of propane

Residential propane prices per gallon almost exactly follow the propane market spot price, at which propane is bought and sold on the global financial market. Yet the great differences in the price of a gallon of propane from one household to another in the US are explained by the following other factors:

• Like many other products, the price of a gallon of propane depends on how many households need it at a given time. Supply and demand affects a price a gallon of propane will cost significantly.
• Similarly, climate impacts on the price a company will charge you for a gallon of propane. Anticipating on higher demand, it is likely that propane will be more expensive in colder regions of the country, or in winter.
• Lastly, how close a home is to a major propane supply source will influence the price of a gallon of propane since transportation costs are factored into prices propane companies offer. The further a home is, the higher the propane price per gallon is likely to be.

Propane price per gallon can include services and fees

When looking for a propane company, one of the reasons you will be quoted different prices for a gallon of propane is that it might exclude or include various services, such as safety, maintenance, delivery or budget options. It is important to know exactly what is included in – and what is excluded from – a propane supply agreement before selecting a company rather than another.