One frustrating fact about the propane gas industry is that the seasonal price-outlook is notoriously hard to predict. Propane price is affected by:
- National & global supply
- Economic factors
- Weather outlook
This lack of certainty isn’t helpful for propane gas customers looking to budget for their winter propane gas expenses.
But, here at Kauffman Gas, we try to make the complex propane pricing outlook easy to understand for our customers. Chris Kauffman, VP of Kauffman Gas, answers your most important questions about the winter’s propane price outlook:
What will propane prices look like in Winter 2017 / 2018?
Unfortunately, no one has a definite answer on what propane prices will look like for the Winter of 2018. There are too many variables that can affect propane prices and it’s too early in the year to make any estimates.
But one thing we do know is that we might be facing a shortage, which would mean prices would be higher. If supply is lower than demand, the companies that drill crude oil can charge higher prices. Because propane gas is derived from crude oil, its prices will go up with the oil prices.
Why might there be a propane shortage in Winter 2017 / 2018?
The latest numbers show US propane inventory is down 25-30% from last year. We’re not building enough inventory each week to make it up!
On a large scale, many countries (including the U.S.) agreed to cut back on production in 2017, which limits supply and raises the chances of a price increase.
For comparison, the US currently has 58,000 barrels of propane for 2017, which is the same level of inventory we had in June 2013. We had very serious shortage problems the following winter.
Will a propane shortage cause Kauffman Gas to run out of gas?
No, Kauffman Gas will not run out of propane in a shortage because we exclusively purchase contract gas. When propane companies buy propane, you can acquire them in 2 different ways: contract and spot.
We buy contract gas almost exclusively. This allows us to have first access to any gas that is available. Contract buyers’ orders are fulfilled before spot buyers are offered propane gas.
Purchasing contract gas ensures we always have gas for our customers, even when other suppliers don’t.
How might I protect my bill against a possible price hike due to the shortage?
Kauffman Gas offers 2 solutions to help control your propane bill if prices rise in the winter:
- The Budget Plan - This plan distributes your projected annual cost over 12 even monthly payments, so you don’t have to worry about a fluctuation in propane prices.
- The Pre-Buy Plan - With the pre-buy plan you can purchase your propane in advance for at a fixed rate so that if winter prices spike, you're paying less at your fixed rate.
With these 2 options, you can find the payment plan that works for you after you look at your expenses for the year and consider our projections for propane prices.