What Drives the Cost of Propane?
As your propane experts in Oxford, Blueox Energy is often asked what drives the cost of propane. Propane prices can fluctuate wildly depending on a number of factors, including the current political climate to economic forecasts in similar ways as other commodities that are traded on the worldwide market.
At Blueox Energy, we are dedicated to providing propane to our customers at the lowest possible prices. While the market does fluctuate, we always do our best to minimize the price hikes. We try to ensure that our bulk buying allows us to keep your prices down while still having all of the propane you need. Contact us today for more information about propane refills or to ask us about home heating oil and propane delivery.
Supply and Demand
In economics class, you are taught that demand is one of the main influences in the price of most commodities, including propane. Demand is based on the overall need for propane, not the demand in your part of the country. For example, if the northern part of the United States is experiencing extremely cold temperatures, but the Southern states are enjoying higher than usual temperatures, they will still have higher propane prices because demand is high in another portion of the country. Basically, it doesn’t matter who is using the most propane, all that matters is a lot of propane is being used.
In addition to supply and demand, the price of propane is affected by fixed and variable costs that companies need to cover in order to operate their business. Many people don’t understand the requirements that are imposed on propane companies by the government. Here is a short list of requirements that propane companies must invest in:
- Licensing fees as administered by government agencies at the federal and local levels.
- Reporting and compliance training for hazardous materials.
- Background checks for employees. These background checks must be performed by the FBI, which is expensive.
- Workplace safety measures as required by OSHA.
- Disaster response plans and fire safety audits plans that must be accepted by both state and Federal government agencies.
- Anti-terror compliance measures and terrorism training that meet federally mandated thresholds.
- Insurance, which is a large expense for propane companies.
In addition to these factors, propane companies also need to make payroll, cover maintenance costs, and pay taxes. In short, there are a lot of costs to factor in before any propane company can expect a profit. These are just a few of the many factors that determine the cost of propane. If you are wondering why the cost of propane has gone up even though we have been experiencing unseasonably warm weather, you now know why.
If you want to keep your propane prices lower, contact Blueox Energy today. We offer great bulk propane discounts and we will even deliver it right to your home! We also have the latest energy-efficient heaters and cooling systems that can help you save even more money on your energy bills all year long. Our delivery drivers are safe and trained to ensure that there are no spills on your property.