Propane Cost

How Much Does Propane Cost?

January 2010 Average: $2.54-$2.68 a gallon

2005-2009 Average: $1.01-$2.66 a gallon

Propane is a gas that becomes liquid under moderate pressure. As a heating fuel, propane is stored in a pressurized tank and measured by the gallon. When released into supply lines, the propane vaporizes back into a gas. Propane is the most common type of liquid petroleum gas, which is also called liquefied petroleum gas, LPG, GPL, LP Gas or autogas.

Typical costs:

Common sizes for residential propane storage tanks are 120, 250, 500 or 1,000 gallons, either aboveground or underground. For safety reasons, propane tanks should only be filled to about 80 percent of total capacity. The number of fill-ups per season will depend on usage and the severity of the weather, but typically might be once every four to six weeks for smaller tanks, and two to three times a season for 1,000-gallon tanks.
During the heating season (October to March), the federal Energy Information Administration (EIA) publishes weekly average propane prices in the United States.
In January 2010, the average weekly price ranged from $2.54 -$2.68, or just over $1,000 to fill a 500-gallon tank. According to historical data from the EIA, from 2005-2009, average prices ranged from $1.01 -$2.66, or $400 -$1,065 to fill a 500-gallon tank. With three to five fill-ups per season, total winter costs could run $1,200 -$5,325. These are national averages; actual per-gallon prices can vary considerably by location depending on transportation costs, level of competition and local supply-and-demand.
The EIA also provides a brochure explaining what consumers should know about propane pricing.

What should be included:

Propane is sold by private companies. Some homeowners own their propane tank, while others rent or lease a tank from the propane company. (See How Much Does a Propane Tank Cost) Consumers who own their tank can shop around for the best price for each delivery, but will have to pay any increases in the market price; they're also responsible for maintaining the tank.
With a pre-buy or fixed-price contract, in summer or early fall consumers buy as much propane as they estimate they'll need for the entire winter. Traditionally propane prices are lower in summer and fall, and higher in the cold winter months -- although because of other market factors, residential propane prices were high in summer 2008 and dropped the following winter. A price-cap contract guarantees the price will not rise about a specific amount, and can be lower if the market price drops.

Additional costs:

Some propane companies charge fees for delivery, hazmat safety, administrative costs, setting up payment plans, invoicing, fuel surcharges or other services. When comparing prices, ask if there are any additional charges.
With a company-owned propane tank, often the company requires that a certain amount of propane be used each heating season, and may charge about $50 -$100 if usage drops below that minimum amount.

Discounts:

Many propane suppliers offer new-customer discounts, usually a lower price per gallon; be aware of the difference between introductory pricing and the standard rate after the "new customer" period ends.
Some companies offer discounts of 5 15 cents per gallon if the account is paid extremely promptly (such as within seven days of delivery) or for automatic-fill customers. Some companies offer a bonus (such as 100 gallons free) for referring someone who becomes a leased tank customer.
Try working with neighbors to negotiate a group rate for deliveries in the same area. For example, Raleigh, North Carolina neighbors locked in a $1.69-per-gallon price for the 2007-08 winter season.
The US Department of Health & Human Services provides information about the Low Income Home Energy Assistance Program (LIHEAP), which helps low-income households meet urgent home energy needs. LIHEAP is funded by the federal government but handled by each state, so eligibility and assistance varies.

Shopping for propane:

Most companies require a new customer to file a credit application before propane is delivered, unless the delivery is paid for with cash, according to the Oklahoma LP Gas Research, Marketing and Safety Commission.
Before signing a contract or arranging for delivery, shop around. Prices can vary significantly between companies and whether deliveries are COD or on a contract. The CT Watchdog newspaper column/blog posts tips for buying propane.
Large, national propane chains include AmeriGas, Ferrell Gas and Suburban Propane. There are many smaller companies, and the National Propane Gas Association provides referrals to propane retailers by zip code.