What’s Going On with Propane Prices?
Written on: December 6, 2021
How to Deal When Propane Prices Rise
Propane prices have been steadily increasing all around the country, and the increase can be hard to accept, for all of us in the Upper Midwest. While dealing with price increases can be frustrating, propane remains one of the most efficient and cost-effective ways to reliably heat your home or business and power your appliances, without interruption – all while reducing your carbon emissions!
Propane price fluctuations: a confluence of factors
Multiple factors influence propane price fluctuations – namely, high demand and supply storage depletion. We’ve all heard that “supply and demand” drives the market, but how does this work on a more granular level? The truth is, propane prices are affected by upheaval both here and abroad, including factors such as:
- Global conflict and natural disasters. When war, political strife, conflict, or natural disasters like tsunamis, earthquakes, or hurricanes, occur in other regions of the world, this impacts crude oil exportation –utilized in the production of the “greener,” more eco-friendly fuel propane – from big oil-producing countries.
- Exportation contracts. On the flip side, the U.S. is a large exporter of propane itself, and export business continues to grow. This is good business for the large wholesale propane suppliers, but it increases demand even further in an industry that traditionally doesn’t store huge quantities of propane at once. Many propane suppliers are obligated to provide the quantity of propane they’ve committed to export, leaving even less of the propane stores for domestic consumption.
- Weather extremes. When exports to the U.S. become sluggish due to global upheaval, our propane supply is reduced. If this reduction in supply occurs during a time of high demand, such the colder months, an even scarcer market develops. When a cold snap is especially extreme or lasts longer than usual, the scarcity if compounded further. And it’s not just cold temps that can increase propane demand. Heavy rains during agricultural growing season create bumper crops that need to be dried rapidly, in great volume.
- Panic buying. The same holds true for expected or anticipated weather – even if the storm or temperature drop never fully materializes or isn’t as bad as feared. The fact of the matter is: the fuel has already been purchased, triggering high demand. In fact, high prices themselves can trigger more panic buying, for fear that prices will continue to climb.
Who profits from propane price increases?
Whatever the cause of the scramble for propane – causing hefty price increases – local propane providers aren’t benefitting. Large wholesale propane suppliers are often mistakenly conflated with local energy providers, but propane businesses that serve customers directly are not the parties triggering price increases, and they don’t benefit from them either.
Lakes Gas handles price fluctuations for you
In fact, here at Lakes Gas, we prefer to see reasonable propane prices that assure customers they can stay warm, comfortable and safe, without sacrificing their savings. That’s why we always strive to provide the most affordable rates possible, and we will always be here when you need us.
Fortunately, we’ve spent years fostering strong partnerships with our suppliers in the Upper Midwest, allowing us to keep propane energy costs affordable for our customers. We also have expert energy professionals on hand to offer advice on keeping your energy costs down and making the most of your energy-efficiency. We’re on your side, and we’re in this together! Contact us today with any other concerns you might have or become a customer!
