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How Much Does Propane Cost Per Gallon?

What factors affect propane’s market price

propane costs new jersey There’s so much to recommend propane for homes in Rockway, Morristown and other communities in northern New Jersey. It’s a versatile, energy-efficient fuel that offers a lot of heating power for your furnace, boiler, water heater, cooking and laundry products.

But this year, prices on all energy have surged in response to market speculation, stubborn supply chain issues and the horrible conflict in Ukraine. Propane-powered households have the relative comfort that propane’s price has risen less than other fuels. Even so, it’s reasonable for New Jersey families to fret over what propane costs (and will cost) and what goes into that price.

How much is propane per gallon?

Nationally, propane costs between $3 and $5 dollars per gallon. In New Jersey, we’ve seen prices lately just under $4. Of course, propane costs can fluctuate daily, just like oil, gasoline, natural gas and electricity. But propane is slightly more stable, price-wise, than many other energy sources because it’s a U.S.-produced fuel. Pretty much all the propane your use is made domestically.

Here are some factors that can affect the price of propane.

Natural gas and oil rates

Propane is a coproduct of natural gas and crude oil extraction and refining. About 70 percent of U.S. propane comes from natural gas extraction, so you will often see these fuels’ prices move in tandem. However, since crude oil products and propane are close competitors, crude oil prices are a better indicator of where propane costs are headed.

Global and domestic demand

It’s perhaps unsurprising that propane prices go up as consumer demand for propane rises (like when the temperature outside drops in winter). Weather events like heavy rains during agricultural growing seasons also cause increased farm demand for propane-powered crop drying.

Another primary driver of global demand for propane is its increased use as a petrochemical feedstock. Petrochemical manufacturers contribute to end-products like plastic, paper, adhesives and detergents. They are now the largest consumers of propane.

Transportation costs and logistics

Propane can be more expensive in northeastern states like New Jersey during the winter not just because of high demand but also because icy weather can cause transportation to be trickier. The cost of propane involves the distance between you and a production and storage hub. The U.S.’s largest storage facilities are in Kansas and Texas, and propane must be transported to a local hub. Longer distances result in higher transportation expenses.

How can you avoid painful propane price surges?

Propane rates can fluctuate significantly during periods of market disruption and spiking demand. Even so, your local propane delivery company can often help make the winter season a little less stressful.

At Dixon Energy, for example, we have pricing and payment programs that can shield you from painful high bills in the winter. We strongly encourage customers to take advantage of our E-Z Pay monthly budget plan. Instead of getting hit with large bills in four or five cold months, you spread your year’s propane costs evenly over the year. Your winter bills get cut virtually in half!

Contact the team at Dixon Energy today to learn more about stabilizing your propane expenses.