AssociatesDirectory

 

 

 

 

FAQs (Frequently Asked Questions) about Propane Prices

Q:
Why is my propane bill suddenly so much higher?
A:
Consumers across the nation are asking the same question about their fuel bills. The fact is, in a free market economy, a variety of supply factors affect the pricing of all commodities—including propane. And as a by-product of crude oil, the price of propane usually tracks the cost of a barrel of crude.

Q:
How does the price of crude oil affect propane prices?
A:
About 55 percent of our domestic production of propane comes from the crude oil refinery process: as a by-product of crude oil, the price of propane usually tracks the cost of a barrel of crude. So, for example, when the OPEC oil cartel cut crude production in 1999 in an effort to increase prices, the price of propane also began to rise.

Q:
Is propane the only fuel that can experience such a price increase? Would I be better off switching to fuel oil or electric heat?
A:
No. Dropping temperatures across the United States, combined with other supply and demand factors, have raised the price of all fossil fuels, including heating oil, gasoline and natural gas. And, on a national average, propane heating remains a far better value than electricity: According to year 2000 U.S. Department of Energy statistics, it could cost more than twice as much to operate your range, water heater, clothes dryer or furnace with electricity as it does with propane gas.

Q:
Is there anything my propane dealer can do?
A:
Yes. Your propane marketer is working hard to protect you from “sticker shock.” Keep in mind that your dealer is as concerned about these price increases as you are. Although marketers have to pay higher prices to their wholesale suppliers, your local dealer values you as a customer and is very reluctant to pass a wholesale price increase on to you. As a further hedge against the rising winter prices, your dealer advises you to fill your tank now, before the heating season begins.

Q:
If supply is low and demand is high, do I have to worry about running out of fuel and not being able to get my propane tank refilled?
A:
No. Overall, there is a sufficient propane supply to meet demand. Although a sudden blast of winter weather and activity in the international market will create increased demand for propane, the industry is moving quickly to meet the demand. There will simply need to be some shifts in product from areas where supply is high to areas where supply is low.

Q:
Are propane price increases occurring nationwide?
A:
Yes, although prices may vary from region to region. Propane is part of a global market, and its availability and price within the U.S. is affected directly by events within and outside our borders. A sudden blast of winter weather in parts of the country will stimulate increased demand for product. Sudden and sharp increases in demand can result in price escalations on the wholesale level. Your propane supplier will do everything he can to offer you the lowest price possible.

Q:
Somebody must be profiting from these high prices. Who?
A:
Traders or anyone else who had the foresight to secure propane before the prices started to rise. If they had been wrong in their speculations and prices had dropped, these same people would have lost money.

Q:
Shouldn’t the government step in and regulate fuel prices when they get out of hand?
A:
The government tried price controls during the 1970s oil crisis, and they were proven to be ineffective. The government does offer assistance for low-income families through a Low Income Home Energy Assistance Program (LIHEAP). For information on this program or to apply for assistance, consumers can check with their local community action agency or state LIHEAP coordinator. More information, including the names of state directors, may be obtained by calling LIHEAP’s general number: (202) 401-9351, website: http://www.acf.dhhs.gov/programs/liheap.

Q:
How can I protect myself from these seasonal price increases in the future?
A:
Talk to your propane dealer about payment options. During the summer months, some customers have paid for a year’s worth of propane in advance, in order to protect themselves from any price increases. You may also want to consider filling your tank before the start of the “heating season.”
 

 

 


 
Arkansas Propane Gas Association, Inc.
PO Box 10, Lincoln, AR 72744

Phone: (479) 824-4299     Fax: (479) 824-5251
Toll Free: 1-866-ARLPGAS


Copyright © 2000 APGA. All Rights Reserved