Understanding the Propane Gas Markets & Price Fluctuations
The impact of the war in Ukraine continues to send shock waves through the world’s energy markets. Natural gas rates have doubled. Electricity costs are surging. And heating oil, gasoline and yes, propane, have all spiked skyward.
Your local propane company knows this is hard for you; it’s hard for them too. When prices spike like this, people tend to think that their propane supplier makes more money. In fact, the opposite is true. Customers cut back on fuel use. They have trouble paying their bills. Meanwhile, your propane company has to pay their wholesale suppliers promptly at much higher rates. Plus, supply chain issues haven’t improved very much. All in all, it’s an awful mess for everyone involved.
While facing the current challenge of higher propane prices can be stressful, try to take comfort in the fact that propane remains one of the most cost-efficient, eco-friendly ways to heat your home and fuel your appliances.
Plus, historical trends have shown us that, when it comes to prices, what goes up must come down. It’s just a matter of when. For all local propane companies and the industry in general, the feeling is, the sooner the better.
Propane Price Swings Are More Moderate than Oil
You may have noticed price swing trends with propane tend to be more moderate compared to heating oil, gasoline, and other fuels derived from a barrel of crude oil.
This is because propane is a completely domestic form of energy. The U.S. actually exports about twice as much propane to the rest of the world than we use in our own country.
Even though propane is still priced in the world market like oil is, this abundance of domestic North American supply gives us supply security and helps moderate the pricing in the U.S.
In contrast, crude oil–while we produce a lot of it here–is still an imported product as well, and we still get it from some countries that really don’t like us very much.
Supply and Demand
The combination of high demand and lower-than-average inventory is always a common driver for higher propane prices. While you may just think of propane demand for home heating and appliance use, it goes well beyond that.
As an example, global demand for propane has risen because of its increased use as a petrochemical feedstock, the vast majority of which are derived from crude oil and natural gas. These petrochemicals serve as the basis of many end products, including plastic, paper, adhesives and detergents. Petrochemical manufacturers are the largest consumers of propane.
Global demand for U.S. propane has remained steady despite higher U.S. prices because international prices for propane and other feedstocks have also increased, according to the Energy Information Administration.
Here are a few more of the multiple factors that can affect the price you ultimately pay for your propane.
Global Conflicts and Natural Disasters
When war, political strife, conflict, or natural disasters like tsunamis, earthquakes or hurricanes occur in other regions of the world, this can impact crude oil and natural gas prices. Since propane is a by-product of both crude oil and natural gas, rising prices for these fuels have a ripple effect on propane.
Before the start of the war in Ukraine in late February, energy prices had been rising in anticipation of the potential sanctions that could be levied on the Russian energy sector if the country went ahead and invaded Ukraine.
Russia carries clout because it is one of the largest petroleum and liquid fuels producer in the world. It’s a major exporter of both crude oil and natural gas.
Even the hint of a possible disruption in energy supply will heavily influence the buying and selling done by commodities traders. In the frenzied world of investment, this is known as the fear factor.
When Russia eventually invaded and the U.S. placed a ban on Russian imported oil and petroleum products–with other countries expected to follow–that meant there would be a big energy void to fill, particularly in western Europe.
Many people don’t realize that the U.S. is a large exporter of propane, and that the 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 propane inventory for domestic consumption.
If a reduction in supply occurs during a time of high demand, such as the colder months, a scarcer market develops. When a cold snap is especially extreme or lasts longer than usual, this scarcity gets further compounded. People may start to panic buy, similar to what we saw at the start of the pandemic with the toilet paper shortage.
And it’s not just cold temperatures that can increase propane demand. Heavy rains during the agricultural growing season create bumper crops that need to be dried rapidly, in great volume. Propane is among the fuels used for crop drying. Propane consumption in corn-producing states typically rises in September and October with the corn harvest, followed by a larger rise related to space-heating needs in January.
Other Factors That Influence Price
Long-time factors that have always influenced where prices go include proximity of supply, transportation bottlenecks, energy policy, and manufacturing trends. More recently, these issues have also come into play:
- the actual cost of delivering fuel has risen.
- new expenses have occurred because of COVID-19 related workforce issues.
- supply chain problems have caused shortages, resulting in shipment delays and inflated prices for supplies, parts, tanks and other materials.
What Will Happen Next?
Nobody can say for certain where things will go from here, but if history is a guide, we can expect to see prices drop pretty significantly in the not-too-distant future. And nothing will make your local propane company happier than when prices return to normal.
Until then, trust your propane supplier to look out for you and let’s hope that—regardless of what happens with propane and other energy prices—we will soon be living in a more peaceful world.
You May Not Have a Gas Pilot Light
Many Tennessee homeowners who grew up in a gas-heated home may be surprised when they find out that their new propane gas furnace doesn’t have a pilot light (also known as a standing pilot or safety pilot). But pilot lights have become outdated technology for gas-powered furnaces and most other gas-burning appliances, like water heaters, fireplaces, and stoves. Today’s furnaces ignite propane gas through advanced technologies.
If you have an older gas furnace, your heating unit relies on a small blue flame known as a pilot light to ensure the ignition of the burners. Water heaters, gas fireplaces, and old gas stoves often have similar pilot lights. If your furnace has a round knob on the gas valve with the words OFF/ON/PILOT/, you have what’s known as a standing pilot ignition.
As you probably know from experience, the biggest drawback to pilot lights is that they will get extinguished at times, causing you to lose your heat. Common reasons include a nearby draft, dirt buildup, or a malfunctioning thermocouple.
Another pilot light drawback is energy waste. Since the pilot light needs to remain active, your furnace is always consuming some propane gas. It’s not a lot, but that obviously adds up over time.
There is a safety issue as well. Pilot lights can develop problems that cause them to burn inefficiently. When this happens, a small amount of carbon monoxide can be released into your home.
Modern Furnaces and Electronic Ignition
All of these problems are not an issue when you have a modern propane gas furnace, which uses electronic ignition instead of an old-fashioned pilot light.
Most furnaces with electronic ignition have a device called a hot surface igniter. This is a small electronic device that receives an electrical current whenever your thermostat calls for heat. The ignition heats up to a temperature that is hot enough to ignite the gas to your burners, and then it shuts off after it has done its job.
Another type of electronic ignition is an intermittent pilot light. This uses a small flame to ignite the burners just like a conventional pilot light. The difference is that the flame is only lit (by an electronic spark) when your furnace is ready for a heating cycle. When the pilot light is not needed, it is completely off, saving you money on propane gas.
A Remarkable Fuel, But How Do We Get It?
An abundant, right-at-home supply makes propane a reliable and efficient fuel choice for your Tennessee home, including all of its appliances, throughout the year. But you do know how propane is created in the first place?
Propane was identified as a volatile compound in gasoline in 1910. Over the years, business leaders and scientists have worked to make propane the viable fuel source it represents today. The process itself of making propane has evolved over the last century or so. Today, there are two primary ways propane is produced.
Natural Gas Production
The majority of propane is derived from natural gas production. To stop condensation from forming in natural gas pipelines, propane is extracted from liquid compounds as the natural gas is being processed. Butane is also extracted during this process. Propane, being much denser as a liquid than as a gas, is stored and transported as a liquid in this form of production.
Crude Oil Refining
Propane can also be created during the process of crude oil refining. There are a lot of products that can be derived from crude oil refining, including gasoline, diesel fuel, kerosene, jet fuel, heating oil—and propane as well. During the stabilization phase of the refining, the heavier hydrocarbons fall to the bottom. But propane, being a lighter hydrocarbon, is at the top and it’s easily extracted.
Propane: An American Made Fuel
Because propane is created through the processing of natural gas and crude oil, it is a fuel that is largely a domestic product. In fact, about 90% of the American propane supply is generated right here in the United States!
Propane Gas Vs. Natural Gas
Natural gas can only get to your home through an underground pipeline. If something goes wrong with that pipeline, you can’t get any gas. Propane gas is easier to move around because it gets compressed, or squeezed, until it turns into a liquid. It is then put inside tanks and your propane supplier delivers it right to your home.
It’s similar to the air in a car tire, which gets squeezed to about two or three times the normal air pressure. But the gas in a propane tank gets squeezed about 100 times more than that. This is why even a small tank can deliver a lot of propane gas.
Make propane the green clean fuel energy source for your Tennessee home or business! Contact your local propane company to explore ways to expand your use of propane.
Read more about the benefits of propane.
Which One Has a Lower Carbon Footprint?
Propane is such a crucial part of the energy mix. American-made propane remains abundant and provides comfort and convenience and saves you money. And you don’t get propane blackouts or large groups of people experiencing service interruptions.
But despite all of this, there has been an aggressive push from those in government to champion the increased use of electricity in favor of other fuels, especially propane, natural gas and heating oil.
But this policy-driven electrification would increase the average residential household cost, result in minimal reductions in emissions and put a severe strain on the electric grid.
In contrast, propane is affordable and available to everyone everywhere, without requiring forced conversions to electric heat pumps, or overburdening the electric grid.
Consider these Propane Facts
Propane gas, like natural gas, is clean-burning and highly efficient. Modern propane gas furnaces are 90% efficient, meaning very little heating energy is lost up the chimney and into the atmosphere. This also means your home burns less fuel to stay warm.
Propane is more efficient than electricity when evaluating the total energy consumed (this includes the energy consumed in the extraction, production, processing and transportation of the fuel to the point of use). Based on this analysis, propane is 87% efficient; electricity is 32% efficient.
It takes three units of source energy to get one unit of electricity into your home. That means more coal has to be burned, generating even more carbon emissions, to get electricity to our homes.
Looking at Emissions
The minimal amount of emissions released by a propane-heated house are cleaner than most alternatives. Propane contains virtually no particulate matter–a known carcinogen–and releases significantly less carbon dioxide (CO2) than other energy sources.
Homes with propane-fueled furnaces emit up to 50% less nitrogen oxide and 82% less sulfur oxide than technologies fueled by electricity. These emissions contribute to acid rain and cause respiratory ailments.
What Does the Future Hold?
Scientists are successfully increasing the renewable content of propane. At the point of combustion, renewable propane is carbon neutral, meaning zero new carbon is added to the atmosphere!
Of course, this important work will not continue if lawmakers stifle innovation and force full electrification. Propane is a vital part of a balanced energy plan!
This Energy Measurement Helps You Compare Fuels
Did you know that propane generates a lot more Btu than an equivalent amount of electricity? This means you need much less propane to produce the same amount of heat energy. That’s a big reason why propane is better for the environment. Because the less energy you use, the greener you are.
To appreciate propane’s big advantage over electricity in energy efficiency, let’s take a closer look at BTU content.
According to the U.S. Energy Information Administration, a British thermal unit (Btu) is a measure of the heat content of fuels or energy sources. It’s measured by the quantity of heat that’s required to raise the temperature of one pound of water by one degree Fahrenheit–at the temperature in which water has its greatest density (approximately 39 degrees Fahrenheit).
What Propane BTU-Per-Gallon Tells Us
BTUs can be used to compare energy sources on an equal basis. To compare propane to electricity, we need to know that:
- one gallon of propane = 91,452 Btus
- one kilowatt hour (kWh) of electricity = 3,412 Btu
To make these two energy sources “equal,” divide 91,452 Btus by 3,412 Btu. Your answer will be:
- One gallon of propane = 27 kWh of electricity. In other words, one gallon of propane contains the same amount of usable energy as 27 kilowatt hours of electricity.
Propane101.com makes this comparison to illustrate the efficiency of propane compared to electricity. A 100-watt light bulb left on for a full day–24 hours–will consume 2.4 kWh. If propane could be used to power the same light bulb. it would only use 9/100th of a gallon of propane.
How Much Propane Will I Use?
Thanks to BTU telling us how much heat energy is in a gallon of propane, we can make estimates about how much fuel the average homeowner will use. The estimates below are expressed as BTU per hour. This is a way to represent a measurement of deliverable power applicable to each propane gas appliance. (Think of it like the horsepower rating of a car). As an example, a typical furnace is about 100,000 BTU per hour. You can go here to read more about BTU per hour.
- Furnace – 100,000 to 200,000 BTU/hour: about 1 to 2 gallons/hour
- Fireplace with ceramic logs – 26,000 BTU/hour: 1 gallon / 3 hours
- Gas cooktop/range – 65,000 BTU/hour: 5 to 10 gallons / month)
- Tankless water heater – 40,000 BTU/hour (about 1.5 gallons /day)
- Gas clothes dryer – 35,000 BTU/hour: less than 1 gallon/ day)
Read more about the benefits of propane.
The Coldest Time of the Year Brings Challenges
With winter looming, this is a perfect time to review some propane safety protocols that are sometimes overlooked.
Being aware of propane safety practices is important year-round, but the coldest time of the year brings us specific challenges and potential hazards.
Here are some tips designed to help you remain safe as in your Tennessee home.
If You Need Propane Repairs, DON’T Do It Yourself
Propane repairs present unique challenges that more often than not require extensive training and expensive diagnostic equipment to assess and fix.
Attempting to fix or modify a propane appliance can cause severe damage and lead to dangers like explosions or carbon monoxide leaks.
The bottom line: If you need a propane repair, don’t attempt to do it yourself– please contact your propane service company and request a service visit.
Tips for After a Storm
- If there’s been a snowstorm, clear a path to your propane tank at least one foot wide for your propane delivery driver. Be sure to clear any snow from your propane tank, including from piping, tank regulators, vents, tubes, and valves.
- Always clear any snow and ice from your driveway so the propane driver can safely navigate his truck.
- Use a broom (not a shovel) to clear snow from all vents and flues around your house to reduce the risk of toxic carbon monoxide gas backing up into your home.
- If you believe that any of your propane equipment has been damaged, don’t use it and contact your propane service contractor for an inspection.
Check Your Carbon Monoxide (CO) Detectors
Your home should have at least one CO detector on each level—and there should be one outside every bedroom. Once a month, test them, and replace the batteries if necessary. Every five years, replace your CO detectors. Follow the same procedure for smoke alarms.
Use Propane Gas Appliances Safely
Never use any outdoor propane appliances—including propane grills—in an enclosed space or inside your home. DO NOT use your propane-fueled stove for heating or for any reason other than its intended purpose.
Leave Your Home If You Smell Gas
If you smell the distinctive rotten-egg odor of propane gas in your home or around your propane tank, get everyone out of the house immediately. Don’t use any electrical switches or phones, and extinguish potential ignition sources like cigarettes or candles. Once you’re safely away, call your propane service provider or 9-1-1 for help.
Read more about propane safety.
Conditions in Your Home or in Your Body Can Make It Difficult to Detect
You may have noticed that your propane company mails you information from time to time to keep you informed about propane safety. You may recall finding a “Scratch and Sniff” test—allowing you to easily recognize the distinct smell of propane.
In its natural form, propane is odorless, but manufacturers deliberately add a chemical compound to give it a strong unpleasant smell. This odorized propane is usually described as something similar to the odor of rotten eggs or a skunk’s spray.
However, there are situations that may prevent you from detecting that telltale odor. Sometimes, conditions in your home – or in your body – can make it harder to pick up propane’s scent.
Commonly known as “odor loss,” this can be caused by:
- Too much air, water, or rust in your propane tank
- A propane leak underground (soil diffuses propane’s odor)
- Odor “sticking” to the inside of the propane distribution pipes
- Diminished sense of smell, caused by old age, sinus congestion or other medical conditions,
With this in mind, it is important to take these two precautions for propane leaks:
- Install a propane gas detector (or detectors, depending on the size and layout of your home). A propane gas detector is an inexpensive but vital piece of safety equipment; follow manufacturer’s instructions for placement and maintenance.
- When in doubt, follow propane safety procedures. React immediately to even the faintest propane odor, following propane safety measures to get your family to safety.
What to Do if You Smell Gas
- Extinguish all smoking materials and any open flames or other sources of ignition. Everyone should vacate the building, vehicle or area.
- Move away without using any electric switches, appliances, thermostats or telephones.
- If it is safe to do so, close the gas shutoff valve on the propane tank or cylinder.
- Call your propane supplier or your local fire department from a mobile phone or a neighbor’s telephone.
- Even if you do not continue to smell propane, do not open or turn on the propane supply valve. Do not reenter the building, vehicle or area. Let a qualified propane service technician or emergency personnel check for escaped propane.
- Have a properly trained propane service technician repair the leak. The propane service technician or emergency responder needs to determine that the leak situation has been fully resolved. The propane service technician should check all of your gas appliances and relight any appliance pilots.
- Return to your home only when the service technician or emergency responder indicates that it is safe to do so.
Without question, propane is one of the safest fuels you can choose for your Tennessee home. But to stay as safe as possible, you should always pay close attention to the operation of your gas appliances. The best way to keep all your propane equipment running properly is to follow the manufacturer’s recommendations for preventive maintenance. Be sure to consult your owner’s manuals for what’s required.
More safety tips
When appliances operate properly, propane burns with a blue flame. If you see yellow flames—or notice significant amounts of soot on any equipment–the gas may not be burning completely. This can create carbon monoxide. Contact your propane company or HVAC contractor for service if you notice a yellow flame or soot on your appliances.
You should also regularly check the outdoor vents of your appliances to make sure combustion gases flow unobstructed to the outdoors. Insects, birds and small animals have been known to build nests in vent pipes. To prevent any damage, use a broom or a soft brush to gently remove any obstructions you find in your vents.
You can read more safety tips here.
If you have questions or concerns about propane safety, be sure to consult with your local Tennessee propane company.
Read Our 12 Safety Tips
Propane heaters serve a lot of purposes. They can provide heating to spaces where your home’s HVAC system doesn’t reach. Propane indoor heaters heat a space faster and more efficiently with lower energy costs than an electric indoor heater.
You have a range of choices when it comes to propane indoor heaters for your Tennessee home. There are portable indoor propane heaters, wall-mounted propane indoor heaters, forced air propane indoor heaters and radiant indoor propane heaters.
Here are 12 tips to help make sure you are using your propane indoor heater safely.
- Choose a propane heater that’s the right size for your room or space, and carries the Underwriter’s Laboratory (UL) label.
- Carefully read manufacturer’s instructions before using your propane indoor space heater.
- Your indoor propane heater should have features such as a low oxygen sensor, high-temperature coated safety guard on the front, overheat protection and automatic shutoff if it tips over.
- Make sure your propane indoor space heater is installed on a non-combustible surface away from where people walk and that it is positioned safely away from combustible materials such as furniture, curtains, doors, bedding and towels. If you use a wall-mounted room heater, make sure your wall material is non-combustible.
- Never place anything on top of an indoor propane space heater.
- Install carbon monoxide detectors in your home, or the space where you use your indoor propane space heater.
- Never leave an indoor propane heater unattended. Turn the heater off when you leave the room. And make sure your propane indoor space heater is turned off before you go to bed.
- If your propane indoor heater has a yellow or orange flame instead of a blue one, stop using it immediately because the gas is not burning properly.Get professional service to fix the problem.
- Use your vacuum cleaner’s hose attachment to carefully vacuum up any dust on the outside of the propane indoor space heater and on the grills.
- Never spray air fresheners, deodorants, aerosol spray cleaners or hair spray near an indoor propane space heater.
- Have your vented propane indoor space heater inspected annually.
- Make sure pathways to all of a space’s exits are clear when you’re using your indoor propane space heater.
There has been a push in recent years to make electricity the default energy choice for everything in our homes. These efforts are based on the inaccurate claim that this all-electrification movement will reduce our carbon footprint. But the fact is, this strategy could have a major negative impact on our homes, our comfort, our planet and our wallets.
On the surface, electricity may seem “cleaner” than propane, but it’s not. Electricity production generates the second largest share of greenhouse gas emissions. More than 63% of our electricity comes from burning fossil fuels, mostly coal and natural gas.*
Propane is by far, the more environmentally-friendly choice because its low-carbon, high-energy output and versatility makes it a perfect fuel for everyone.
Fast Facts From the Propane Education Research Council
- The Energy Star program gives propane a source site ratio of 1.01, compared to 3.03 for electricity from the grid. This means it takes 3.03 units of electricity to produce and deliver one unit of energy to a home, compared to only 1.01 for propane
- Propane is electric grid-free, making it a valuable partner energy source at solar and wind generation facilities when the sun doesn’t shine or the wind doesn’t blow.
- Energy should be affordable so that no one has to go without, but the share of income that low-income households spent on electricity rose by one-third in the last decade.
- Propane produces 43% fewer greenhouse gas emissions than using an equivalent amount of electricity generated from the U.S. grid.
The Problem With Electric Heat Pumps
When it’s really cold, there isn’t generally enough heat energy outside for your heat pump to keep you comfortable. The house just never seems to warm up. If temperatures drop to the single digits, many people complain that they can’t get their home much above 60 degrees.
You may end up using all sorts of electric space heaters, which are the most expensive way to generate heat. Or you may also rely on backup electric strips, which are also expensive and often emit a burnt odor; this is caused by dust and other residue that has built up around the strips.
This lack of warmth is a common problem with older heat pumps. Although new technology supposedly has made heat pumps more efficient and better suited to colder climates, it seems as if most propane consumers are not sold on that yet and don’t want to risk their comfort on electric heat.
Heat pump conversions are also expensive! Plus, the average electricity consumption for Tennessee households is 33% higher than the national average and among the highest in the country. What’s more, about two-thirds of Tennessee residents already heat with electricity, also a greater proportion than the U.S. average.**
Our Aging Power Grid
The electric infrastructure in this country fails us time and time again, causing massive disruption, frustration, and discomfort. Most of today’s grid was built in the years following World War II. But now, it’s reaching capacity and old equipment is failing. Upgrading our electric infrastructure will be a massive—and ultra-expensive– undertaking. The last thing we need right now is for the electric grid to be strained by an enormous new demand—by electric cars, all-electric homes, and more.
Propane: The Clear, Clean Choice
Because propane has such a low carbon content, it produces next to zero greenhouse gas emissions or air pollutants, making it a clean-burning energy source that can reliably fuel homes, heat water, and even power vehicles.
Propane generates more Btu than an equivalent amount of electricity, so you need much less propane to produce the same amount of heat energy. Propane furnaces produce much higher indoor air temperatures than their electric counterparts, guaranteeing that you will keep your home toasty warm even during the most frigid nights of a Tennessee winter.
Also, clean-burning propane appliances are efficient, because they waste very little fuel in the combustion process, unlike electric-powered appliances.
**EIA, Tennessee State Profile and Energy Estimates.
If you have a swimming pool in your backyard, count yourself as among the fortunate ones who have an outlet for the kids to find some respite from cabin fever. Even if the summer temperatures haven’t set it in, you can enjoy your pool sooner—and later into the fall—by heating your pool with propane. That can make a huge difference with many summer plans and camps canceled due to Coronavirus concerns.
A high-efficiency propane pool heater (sometimes referred to as a gas pool heater) can cost about half as much to operate as an electric pool heater. And if you rely on one propane fuel and service provider, they know your home’s heating source and can seamlessly integrate your pool heater and install it quickly and properly. You can’t trust that expertise to just any “pool guy.”
How Does a Propane Pool Heater Work?
A propane pool heater simply burns gas to warm water from the pool pump then cycles the water back into the pool. That’s why propane pool heaters are an ideal choice for in-ground and aboveground pools and spas.
Propane pool heaters are:
- Easy to install and maintain
- Extremely durable and reliable
- Available in a number of sizes and colors
Propane Pool Heaters vs. Electric and Other Pool Heating Options
Propane pool heaters have distinct advantages over other pool heater types, including:
- Electric heat pump heaters – While this system is a more cost-effective than using a simple electric element pool heater, it needs to use surrounding air to warm water in the pool – which means it can only produce water that’s slightly warmer than the temperature of the air. That’s a problem if you feel like a swim when there’s a chill in the air.
- Solar pool heaters –These have higher upfront costs and take longer to heat your pool compared to a propane pool heater. A solar system also doesn’t work at night or on cloudy days when the sun isn’t at its brightest.
- Natural gas – If you have natural gas service in your neighborhood, keep in mind that propane pool heaters give you the same performance of natural gas heaters without the expensive hardware and hassle needed to connect to your home’s gas line.
To learn more about propane pool heaters and the many other ways you can take full advantage of propane inside and outside your home, please contact your Tennessee propane service provider and they’ll be glad to give you advice.