The Increase in Costs and How to Prepare Yourself
The increased cost of propane is having a negative effect on people’s budgets in homes across the globe. With prices rising on Long Island, it can be a little scary thinking about heating your home during the winter months.
While propane is becoming more popular in New York, being a clean form of energy and a common way to heat homes, the demand is soaring while inventory remains low. Though impacted by world events raising prices, propane has remained significantly lower than oil.
With the current economic hardship faced by millions today, knowing where the propane industry is heading and how to prepare yourself is crucial.
Propane Trends Leading into 2022- Future Predictions Based on the Past
As of October 22, 2022, the U.S produces around 2.5 million barrels of propane per day, importing 0.083 million barrels and exporting 1.454 million barrels. These numbers may seem a bit confusing but play a significant role in the cost of propane today.
To get a better understanding of the propane industry and its impact around the world, let us take a quick look at some of the previous trends that experts are using to predict the future of this fuel.
1. Decline in Propane Inventory
It is important to note that propane inventories for 2022 are at a near record low of a six year average and will likely drop below that by the end of this year.
There are multiple factors that have contributed to the lack of demand in the propane sector, including inflation, the Covid-19 pandemic, and the Russian invasion on Ukraine.
With a lack of inventory and the increase in demand, the propane industry will likely continue to increase the cost of their product.
2. Increased Demand/Decrease in Production (Factors that Play a Large Role in the Industry)
With winter fast approaching and the country and other areas around the world are preparing to keep their homes and families warm, the need for propane will skyrocket. For this reason alone, the US, is going to feel the impact on their inventory and reserves.
Aside from the cold season falling upon us, another factor that plays a huge role in the supply and demand trends in the US propane industry is the Covid 19 pandemic.
With people traveling less, the need for crude oil dissipated, and production declined significantly. Once the need for more oil increased, finding workers became exceedingly difficult, keeping the production at a slow and steady pace.
A lack of travel means more families are staying indoors during the coldest days of the month, utilizing their heat much more than they had in the past. Without the workforce to produce more propane, we will not see an incline in supplies anytime soon.
Demands for Clean Energy
Another factor that plays into the high demand for propane, is the increase in the interest of clean heating from warming homes to cooking your food. It is also a cleaner solution to automotive fuel domestically and internationally.
While the interest in global, the demand seems to currently be the highest in the Asia-Pacific areas where countries like China are desperately seeking out ways to reduce air pollution starting with cleaner fuels.
3. Increased Propane Prices
Over the last few years, the fluctuation in propane prices have significantly been some what of a roller coaster ride with the average cost per gallon being around 2.20 per gallon in the early months 2020, rising in the later months of 2021 to 3.491 per gallon, then dropping about .30 per gallon in the first half of 2022.
What does that mean for the winter of 2022? Experts predict a depressing 54% hike on heating bills on average for homeowners. This is due to the exceptionally inflated price of propane for the year peaking at around $3.00 per gallon.
Sadly, this might require many homeowners to conserve this year on many expenses.
4. Imports and Exports: How is High Demands in Other Countries affecting the US?
Let us take a little trip back in time to a little more than a decade ago. Propane production in the US was running at an all-time high while the demand domestically stayed about the same.
With an increase in production and no space for storage, companies took to exporting their supplies to other countries that were in need. This move lead to the US producing more barrels for exportation than they were for domesticated use.
Once the demand increased in the United States, these same companies started struggling to fulfill their export and import orders.
How to Prepare for the Increase in the Cost of Propane?
With the cost of propane hitting the highest they have ever been since 2011, there are many people concerned about how they can prepare for the upcoming winter. Luckily, there are various things you can help yourself, save money and make it through these trying times.
Get Your Home Winter Ready
The best way to save on your utility bills this winter is to make sure your home is winter ready. This means,
- Check for leaking windows and doors
- Seal your basement and attic
- Add insulation when needed
- Keep your home heating system maintained (have your system checked annually by professionals to ensure it is working efficiently.)
While you cannot lower the cost of propane, you can help keep a little money in your pockets by taking actions before the temperatures dip to low.
Picking the right supplier will help you save on your propane costs. The differences between companies can be substantial, often as much as a dollar a gallon between them. This adds up quickly when you look at your annual consumption.
What Does the Future Hold?
As of October of 2022, it does not look like the near future prices are going to look any better than that of the current ones. However, with an increase in production, and President Biden putting a stop the exportation of propane to Russia, there is a renewed hope that we will see a little relief at the pumps and heating our homes.
How to Choose a New Provider
A Google search of “propane providers in my area” can be a first step toward choosing a propane provider. However, it can’t be the only step. Companies that offer propane gas delivery are not created equal. Doing your due diligence when you are selecting a provider is important.
Make sure they are directly delivering your gas with their trucks and not outsourcing to another company. There are some internet based companies that do this. You could be left in the cold or worse – how would they handle a safety issue? I like to deal directly with the company when I need something, not have to rely on two companies being on the same page when I’m in desperate need of their services.
Reviews on Google, Yelp, Facebook, etc can help you get a clearer picture of how that company does business.
- Bad online reviews – while you might give the benefit of the doubt to a company with one rogue bad review, steer clear if the company has several. Bad reviews often mean the customer felt repeatedly left out in the cold, and you might too. It also may give you an idea how competitive their pricing is.
- No online reviews – an absence of reviews or low quantity isn’t a “clean slate”. It often means that this company provides hum-drum, bare-minimum service. Worse, it could mean the company is hiding their bad press from you and you have to specifically search for their reviews. You deserve a company that goes above and beyond.
Online Account Management
Do they have online account access or you have to call to make payments, check your price and more? In today’s high tech world, your should have a full account management via a phone app and online portal. Being able to pay your bill online and see your account history is expected today.
With some companies you can even see your current tank level and current price per a gallon, that’s full transparency.
Avoid Paying Too Much for Propane
Propane Depot is a Top Rated Locally Owned Company
Click here for a free quote from Propane Depot or call 631-400-SAVE. We provide free* smart monitoring systems so that you know the exact propane level in your tank. Complete online and phone app account management including seeing your current propane price and tank level.
We’re a full service company covering northern Nassau and Suffolk Counties.