What Causes the Change in Propane Prices?
We are all aware of the talk on the news about crude oil prices and gasoline that may approach $4.00 a gallon this summer but what really drives the cost of propane? Propane prices behave a little differently and are influenced by many different factors: 1. Crude Oil and Natural Gas Prices. Propane is manufactured from the crude oil refining process and natural gas manufacturing. Because of this relationship propane prices typically trend in the same direction as these gas prices. 2. Supply and Demand. Supply and demand, one of the basic economic drivers that we learn in school, obviously has an impact on energy prices including propane. Propane is produced year-round so there is little change in the output for supply but the use of propane is highly seasonal since much of the propane produced is used for heating. Since the majority of propane is produced domestically if there is a severe cold weather snap that increases demand it can create a price spike because it is difficult and sl
