Propane Costs - basis?

[chasfm11]

With the topsy-turvy months that we've had on gas and diesel prices, I was surprised on Sunday by the price of propane. Here are our purchases since December 2007 (Date, cost, gallons, cost per gallon)

12/24 34.17 13.4 2.55
01/26 57.12 22.4 2.55
03/02 22.39 8 2.80
05/04 16.78 6.1 2.75
08/13 13.73 3.9 3.52
10/26 21.68 6.8 3.19
01/04 47.12 14.5 3.25

I seem to remember (perhaps incorrectly) of discussion logic that tied propane and some others to an "equivalent BTUs" rate. At least that is how I thought I got to pay $3.52 a gallon for it at the height of the oil costs. Now that those have plummeted, I was shocked that propane was going in the other direction.

In the grander scheme of things, it isn't important at all. It is just that inquiring minds would like to know. I thought that propane was a by product of natural gas and crude oil refining and expected it to fluctuate with their costs.

[Hitchhiker]

Average propane prices have declined since a peak around September '08.

[UFO Pilot]

I wonder if it higher due to increased winter consumption? Many people in this area use propane for cooking, heating, etc. Many rural areas have no access to natural gas. I filled 2 five gallon bottles last weekend and paid $3.49 per gallon.

[UFO Pilot]

Not where we live.

[Tom N]

Retail propane costs lag oil/gas/fuel pricing by many months, even as much as a year.

The propane you purchase today may have been delivered a year ago.

-Tom

[chasfm11]

The propane you purchase today may have been delivered a year ago.

Interesting. The 1/4 purchase was at the same CG as the 12/24 one last year. They do a whopping business in propane since they are one of the few in the area that has "reasonable" access for MHs and they appear to be turning over their small, local tank quite frequently. To you point, however, the supplier to them may have bought propane a very long time ago so it is the "middleman" where the continued costs are held.

[doc]

basis? Mainly that they have it, we want and need it and will have to pay whatever they demand. Gasoline and fuel prices are down somewhat, but for some reason here in N Georgia they are headed back up The goverment here in Ga just dropped 4 cents off the state sales tax - go figure that.

[RustyJC]

Originally posted by chasfm11:
I thought that propane was a by product of natural gas and crude oil refining and expected it to fluctuate with their costs.

A fairly decent primer on hydrocarbon gaseous fuel/feedstock production is located HERE.

Rusty

[paz]

Originally posted by chasfm11:
I seem to remember (perhaps incorrectly) of discussion logic that tied propane and some others to an "equivalent BTUs" rate.

I saw calculations, too, but I don't remember where I saw saw them either. However, I do remember the number to use for comparison. The calculations I saw took into account the BTU content of propane and compared it to the KW-hr value of electricity. Some assumptions were also made about efficiencies, etc.

The final number the calculations came up with for comparison is 22. If a gallon of propane costs more than 22 times the amount for a KW-hr of electricity, it's cheaper to to use electricity and vice versa.

For example, the rate for electricity where we are staying this winter is a very reasonable $.11 per KW-hr. Propane price varies by region, but most Flying J stations are currently charging around $2.70 a gallon. $2.70 divided by $.11 is 24.5. Therefore, according to the calculations I saw, it's cheaper to use electricity where we are currently staying.

At the last campground where we stayed that charged for electricity, the rate was $.14 per KW-hr. $2.70 divided by $.14 is 19.3. At that campground, it was cheaper for us to use propane.

Most times, there is no extra charge for electricity, so it's obviously cheaper to use electricity instead of propane. Even if there is an extra charge, we will generally use electricity instead of propane even if propane would be a little cheaper. This is because of the inconvenience of having to stop to fill the propane tank. Portable tanks are a lot easier to fill than the permanently-mounted tanks in motorhomes. It seems when we need propane, it's always is on the wrong side at Flying J, and we have to jockey for position to come through the line in the opposite direction. Therefore, I try to stretch the propane as far as I can.

[chasfm11]

Therefore, I try to stretch the propane as far as I can.

We do, too, Paz. But we have a couple of things working against us on that:
1. Our genset is propane. If we need to run the roof A/C enroute (as we did in August), that will significantly increase our propane use.
2. We don't winterize. In the DFW area, we've been up and down temperature wise like a yo-yo. We'll hit 80 degrees tomorrow but last weekend we didn't get out of the 30s. We leave the furnace on to protect the RV, both the plumbing and what we have stored inside. We have electric heaters but they do not circulate the air through the underside tank area. I have the freshwater tank drained but not purged.Typically, we'll use 20+ gallons of propane per month in the December/January time frame.

[DonavonP]

Originally posted by Hitchhiker:
Average propane prices have declined since a peak around September '08.

I was able to "lock in" my winter supply at the peak. I'm a regular financial genius.

[RustyJC]

Originally posted by DonavonP:
I was able to "lock in" my winter supply at the peak. I'm a regular financial genius.

Yep, I locked in my electricity rates for the "sticks and bricks" house last summer with a 2-year renewal of our contract with our electrical provider.

Rusty

[Roam America]

In November I paid 2.79/gallon for LPG. Last week I still paid 2.79/gallon. I know LPG does not fluctuate as much as gas and oil, but I thought it would have decreased a little. Oh well.

[RedneckExpress]

Personally, currently looking at those smaller household type bullet tanks and a commercial refiller to see if I can get my monthly supply of propane cheaper than pulling the 20lbers every week and having them refilled (I go through a 20lb tank in about 5-7 days, depending on the outside temperature.