Comparing Contract Propane Prices
Many propane consumers will contact various propane suppliers during the summer months to set-up a propane price contract that fixes or caps his/her propane price through the winter season. These contracts may be referred to as a pre-buy or price-cap agreement. In many cases, the agreements can be a cost-saving measure for homeowners. However, it is important to remember that propane price contracts typically do not guarantee lower propane prices resulting in a lower heating cost during the term of the agreement.
How can you determine if you made a good decision by signing-up for a propane price contract that fixes your propane price through the winter heating season? The best way is to perform multiple mid-winter propane price surveys showing the difference between your current contract price vs. the current non-contract propane prices offered by all local propane suppliers.
Make a note of two or three days on your calendar to check your propane prices during the heating season. You may decide to conduct your propane price survey on December 15th, January 15th and February 15th, for example.
When your propane price check dates arrive, look at your propane pricing file to become familiar with your current propane contract price. Contact each propane supplier, including your current supplier, to request a current propane price per gallon quote for a customer that uses the approximate volume of propane that you consume on an annual basis. After completing your propane price survey, view the current propane price quotes provided by each local propane supplier. Calculate the propane price per gallon difference between all local suppliers and your current propane contract price. Make a note of the various propane prices by supplier to reference during your next propane price check. Also, be sure to convert any annual fees that you may have paid to obtain your propane price contract into a propane price per gallon value - by dividing the fee by the average number of gallons consumed in your home on an annual basis.
At the conclusion of the winter heating season, you will have a better understanding of how your current contract price compares to the current non-contract propane prices that were charged by all local suppliers at various times throughout the heating season. Although propane pricing contracts typically do not guarantee propane heating cost savings, your propane price survey data will provide valuable historical information as you consider propane pricing agreements in future years.
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