Establishing A Price: Factors That Play Into The Price Of Your Propane
With all forms of fuel, the prices will go up and down. Propane is no different than oil or gas when it comes to price fluctuations. When you have a business to run, it may help you budget every month if you understand the factors that play into the price of your propane. With supply and demand always in flux, taking a careful look at how propane is brought to the consumer can help you understand why prices change.
Demand Goes Up in Colder Months
When homes and businesses rely on propane for heat, the demand for propane in the colder months rises dramatically. While the increase in demand is always expected, and propane companies try to prepare in advance, the supply is not always available for companies to stock pile the fuel. When demand goes up and supply is decreasing, the prices will rise. If the weather is unpredictably warm during the winter, the supply won't dwindle as quickly, and you should see a decrease in propane prices.
The Current Price of Crude Oil Effects Propane Prices
Propane is created as a bi-product of natural gas and crude oil. The more expensive crude oil is at the time, the higher propane prices will be. Crude oil prices are also based on supply and demand, but crude oil prices don't fluctuate as much with the changing of the seasons. Crude oil is used to make gasoline, and prices often rise in the summer months, when people are travelling frequently. To try and predict if your propane costs will rise soon, take a look at the trends in crude oil prices.
How Far Your Propane Has to Travel to You
If you are a business in the United States, and the US is currently producing enough propane to meet the needs of customers, the propane does not have to be imported. This will help stabilize propane prices. If the US isn't able to produce enough propane to meet the current demand, propane will have to be imported from other countries. This means that the price of propane will rise because the propane has to travel farther to get to you. The farther the propane is from it's destination, the more expensive it will be.
As you budget for your business, you can look at market trends over the past few years and get a good idea of what your propane costs will be in the upcoming months. Contact a company like Reeves Propane for more information.