Propane price trends and crude oil

Propane is a byproduct of natural gas and crude oil production. The first element affecting propane prices over time is the crude oil market price. The graph below shows that propane prices largely follow increases and decreases in crude oil prices. It is difficult to establish fixed trends for crude oil prices since they depend partly on the global political and economic climate. As large crude oil suppliers are Middle-Eastern countries, the situation in that region is particularly relevant when looking at crude oil price trends, and, ultimately, residential propane price trends.

Propane spot price trends

Various other factors affect propane prices over time. For instance, propane is traded on global financial markets like any other commodity to variations in the propane market spot price will affect the price you are likely to pay your propane company for a propane delivery. The graph below shows a general increase in the spot price for propane over the last 20 years though spot prices have tended to stabilize over the last seven years or so.

Source: US Energy Information Administration

Residential propane price trends

Residential propane prices, so the price you will pay per gallon of propane delivered, depends on your supplier. Residential propane prices are not regulated so it is difficult to determine their precise trends. The price a homeowner will pay depends on supply and demand, climate, proximity to a major supply source and services included in the price charged by a company. However, the following chart shows the US residential propane price average over the last 20 years. Clearly, overall residential propane prices have increased significantly over that period.

Source: US Energy Information Administration

Propane residential price projections

The United States Energy Information Administration analyses market trends and makes projections over the long term. For LP-Gases, there is a gradual but stable increase in price over the next 20 years. It is difficult to make accurate predictions but EIA analysis shows that the price increase over the next 20-year period should not be nearly as high, overall, as the rise in propane prices over the last 20 years.

Source: US Energy Information Administration

Propane and other energy price trends

Although the price of propane is set to increase according to US Energy Information Administration statistics, so should the price of other sources of energy. The graph below shows the EIA price forecast for propane, fuel oil, natural gas and electricity. According to EIA data, propane will remain cheaper than other sources of energy, except for natural gas, for the same amount of power (number of British Thermal Units, which is the energy required for a certain energy output).

Residential Energy Price Forecast by Source (2011 dollars per million BTU)