What Factors Influence the Price of Propane?

There are a variety of factors that influence energy costs. Several of these also impact both the price Ferrellgas pays for propane on the wholesale market as well as the retail price for propane used in American homes, businesses, and farms nationwide.

Propane is a byproduct of domestic natural gas processing and sometimes crude oil refining. Ferrellgas’ wholesale cost of propane fluctuates along with the cost of those commodities. Natural gas is also trading at a level not seen in several years. This increased cost of natural gas has contributed to higher wholesale and retail prices for propane. 

Here are some additional factors that are currently influencing the price of propane:

• The cost of diesel fuel has increased dramatically since last year. This has affected propane costs because many propane delivery trucks use diesel fuel. 
• The costs of both steel and labor have increased year-over-year as well. This can also affect propane costs.
• The trucking industry continues to face unprecedented labor shortages. Driver wages across the country have increased, which adds to the overall expense of delivering propane to homes and businesses. 
• In the agriculture segment, some experts forecast that crops will require more drying time this year, which means dryers will need more propane. This increased demand may impact propane costs. 
• The demand for propane in Europe and Asia also impacts propane prices. More than half of the propane produced in the U.S. is exported. 
• There is continued international unrest because of the war in Ukraine. Crude oil prices spiked after the war began and have fluctuated since. Leaders are concerned Russia may take steps to shut down some pipelines in Europe, which could have a significant impact on global energy prices, including propane prices in the U.S.  

Ferrellgas understands the impact this unpredictability can have on household budgets. That’s why we take the time to educate customers about our Budget Billing program, which allows customers to spread their annual propane cost over a period of 9 or 12 months at zero percent interest. Budget Billing payments can be adjusted from month to month if propane prices increase, but customers do not pay more in total by spreading out their payments. Check out this Ferrellgas Newsroom article for more information about Budget Billing.

Ferrellgas also provides an easy and hassle-free experience for customers by offering a number of convenient payment options and 30-day credit terms to those who qualify, and its customer service personnel are familiar with Low Income Home Energy Assistance Program (LIHEAP) funding and how to direct customers to those resources.

These and other unique factors could create challenges for Americans to pay their energy bills this winter. That’s why the company is more prepared than ever to offer guidance to customers who may need energy assistance this year. Learn more by clicking here.