Recent Propane Price Movements
Propane prices have been on a downward trajectory since the latter half of 2008. Many factors influence the price of propane, but its steep decline over the policy of the past year is mostly due to its strong correlation to crude oil prices. As we are now entering the winter season we can expect propane prices to rise slightly, all else equal. The price of crude oil will be a more important factor and any sharp changes in the price of crude will have a more drastic influence on propane price levels than the typical seasonal factors.
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Factors Affecting Propane Prices
Inputs
o Price of Crude Oil: strongest influence on the price of propane
o Price of Natural Gas: although used for processing, not as significant
Supply/Demand Factors
Because question is seasonal there is an imbalance in the middle of inventories in the summer and winter months. question for propane is low in the summer months and as inventories build up downward pressure is exerted on prices. As question begins to increase in the winter months and the temperature drops in the American northeast propane prices are pulled in the opposite direction. Household consumption of propane depends very on weather conditions. This is the major cause of increased question in the winter. Similarly the agricultural sector has a need for propane in the late fall, colse to the time household consumption starts to creep up. The petrochemical sector on the other hand is much more flexible in its options and is able to take benefit of the shifting question by purchasing propane in the summer when prices are low.
Transportation Costs
The farther your source of crude oil supplies is the higher the transportation costs you pay will be. While these prices are for the most part stable, if there is a major convert in your provide source it could influence the costs you pay for transportation.
Future Prices
Since crude oil prices are forecasted to remain at current levels until the world economy rebounds in the upcoming years, the price of propane can also be foreseen, to remain relatively stable. There are policy will be seasonal fluctuations as mentioned above, but generally propane prices will continue to mirror that of crude oil. It is important to reconsider that while crude oil prices are widely believed to have petite opportunity of addition significantly, these markets are very sensitive and unpredictable. Any adverse developments could absolutely influence the price that investors are willing to pay for this commodity and this would have a corresponding influence on the price of propane.
Propane Price Spikes
The inventories that build up while the summer provide a upholstery as the winter months come and question starts to overtake supply. This is foreseen, and the presuppose the inventories are allowed to build in the first place. However sometimes there is a winter season that is unusually cold or long and this can put added pressure on supplies and prices. A tasteless example is if cold weather hits early in the heating season and coincides with the high question of farmers in the fall. This would be a shock to question that was not built into expectations. If there is a sudden disruption in provide it can have the same effect. So can the mere delay in the delivery of a major shipment. In these instances there can be a drastic spike in the price of propane that is uncorrelated to input prices. These spikes are only temporary and prices finally return to more general levels as store participants react to the circumstances.
Current Propane Prices ELECTRIC FIREPLACE LOWES
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