Factors that Influence Propane Price


One of the most common inquiries that any propane dealer ever answers is the question, “What is the price of propane?” While the answer will always simply be a dollar figure, propane prices are a bit more complex than just a dollar figure measured per gallon. Propane prices can fluctuate greatly depending on unforeseen economic, political, climate and other factors because propane is a commodity that is refined from other commodities and is traded on a worldwide market. Just make sure to note that propane prices are much more complex than anybody realizes and while propane companies are for profit businesses, they are not always profitable.

Propane Demand

Demand is one of the main factors influencing the price of propane in Texas. Whether or not demand in your area is at a peak level is insignificant. What’s significant is whether there is demand everywhere. For example, if temperatures in the northeast United States are extremely cold, demand for propane increases. Even if if warm weather is prevalent around the rest of the country, there is still a higher demand for propane and propane is transported to the northeast where it is needed from other parts of the country. A large amount of propane is refined in Texas and processes from natural gas which is then shipped via pipeline or other mode of transportation to where it is needed. Even if the weather in Texas is unseasonably warm compared to the rest of the country, the price of propane in Texas will rise. Simply put, it doesn’t matter who is using the propane, it only matters that it is being used.

Your Propane Price

The price of propane in your area is primarily a function of the market and demand but dealers have variable costs and fixed costs they have to cover to continue to operate their business. Many who use propane don’t understand the requirements imposed on propane companies by local, state and federal government. These requirements include but are not limited to:

  1. Hazardous materials reporting and compliance training
  2. Company licensing fees administered by state propane regulatory agencies
  3. Employee background checks — You probably didn’t know that propane delivery drivers are required to have a background check performed by the FBI. These background checks are not cheap.
  4. Driver qualification requirements filing and reporting for the U.S. Department of Transportation
  5. Department of Homeland Security requires security and emergency plans submitted routinely
  6. OSHA compliance measures for workplace safety
  7. Many states collect fees for commercial and other types of installations
  8. Fire safety audits and disaster response plans submitted to state and Federal agencies
  9. Terrorism training and anti-terror compliance measures for propane tank installations meeting Federally mandated thresholds

Insurance is one of the largest expenses a Texas propane company has. To be insured, a propane dealer in Texas must provide evidence of compliance for the above in addition to many other requirements imposed by the underwriter. Without insurance, a Texas propane company will lose its license and operation will cease. Similar to any other business, propane dealers have fleet maintenance expenses, payroll, taxes, fuel costs and numerous other operational costs so contrary to popular belief, the market price for propane in Texas subtracted from the dealer is not purely profit. That’s just what’s left over for the dealer to operate the business with. The profit, if during some years, is what’s left over after operational expenses are paid.

Propane companies in Texas, as well as the rest of the country, are regulated and subject to the jurisdiction of the U.S. Department of Transportation, Department of Homeland Security, OSHA, National Fire Protection Association, U.S. Department of Energy, Federal Bureau of Investigation (FBI), state Departments of Transportation, state propane regulators, local fire departments and fire marshals, municipal building codes and city ordinances. Compliance with these agencies on the Federal, state and local levels is not an inexpensive undertaking.

The Cost of Shopping Around

Finding a bargain is one of America’s favorite pastimes. Searching for the best propane price in Texas is also common among consumers but bargain hunting with regard to propane has pitfalls and potential consequences. It may also sound unusual that shopping around for the cheapest gas price could be potentially dangerous, but the factor is it is a reality. It’s also a matter of comfort and family warmth during unseasonably cold weather. While price shopping isn’t bad by any stretch of imagination, propane companies are able to track customer usage through computer programs tailored to the propane industry, so they can accurately forecast when users will need a delivery of propane. If a user gets propane from another company because they save a few bucks, that particular customer’s usage history will be thrown off completely and forecasting will be useless. Not to mention, the cheapest price does not always imply the safest or best service. Having an ongoing relationship with an established propane company is an essential link in the overall picture of safety and service.


In conclusion, one should check the safety records of propane companies before buying. Ask your propane company for information about their safety practices, not just their price. Saving a few bucks may sound like a good idea, but are you willing to place the comfort of your family at risk just because you found a cheaper propane price? Contact Texas Propane with the link below for more information!









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