Propane Pricing Tips
It is very important to conduct your own propane pricing research on a regular basis to ensure that your price is competitive. If you are not participating in a supplier prebuy or price cap program and your suppliers propane prices for customers with a leased propane tank are not publicly posted, consider the following methods of propane pricing research:
- Check to make sure your propane supplier is clearly printing your exact propane price per gallon on each delivery ticket. If these documents fail to show your propane price per gallon, contact your supplier and request that your propane price per gallon be included on future delivery tickets (in some areas, this is state law). Your propane price per gallon information from your current supplier is absolutely critical for your propane pricing research. Without being aware of your propane price per gallon, you will be unable to compare propane prices offered by other suppliers in your area.
- Call your current supplier once or twice per month, especially during the winter heating months, and anonymously inquire about their standard price per gallon. Anonymous pricing inquiries will ensure that your supplier quotes unbiased pricing information applicable to all customers using a specific volume of propane. Contact other suppliers in your area and inquire about their standard price per gallon at the same time. Ask for both the current customer and new customer pricing information for a customer that purchases your approximate propane volume each year. Note prices for both purchased and leased tanks. Is my prebuy contract really saving me money each year? Are my many years of supplier customer loyalty being rewarded with attractive pricing that reflects a long-term loyal customer? Will a price cap program save me money? Bottom Line: Only propane pricing research will answer these questions. Keep your research information organized in a file for comparison purposes in the future.
- After receiving a propane delivery, contact other suppliers to compare their price per gallon with the price per gallon that appears on your suppliers recent delivery ticket. Keep a record of the pricing information by date to review periodically.
- When viewing the Federal Government EIA Propane Pricing Data, it is important to pay close attention to the directional trend of propane prices, rather than the exact national average price per gallon. If the national pricing average is going up or down during the past few weeks, compare the direction of your suppliers pricing for the same time period. The directional pricing movement will not be identical; however, the pricing should follow the same general direction.
- Be cautious when a supplier offers a "special program offer" that includes a "discount of 2 cents off our regular price" or a "discount of 5 cents off our regular price", especially if the propane supplier's prices are NOT publicly posted. The supplier should validate the "special discount offer" by publicly posting both the original price per gallon and the reduced price per gallon after the discount. This will give you the opportunity to clearly verify the "regular" and "discount" prices.
- When participating in a propane pre-buy program, make sure you periodically spot check your current pre-buy price per gallon vs. standard non-pre-buy propane prices throughout the winter. To compare these propane prices, contact two or three suppliers in your area each winter month to compare their non-prebuy propane price with your current pre-buy contract price to determine if your suppliers pre-buy contract program is saving you money. This pricing evaluation will not change your current pre-buy contract price, however, two or three years of comparison pricing will give you useful information when considering propane pre-buy agreements in future years.
- Ask your friends and neighbors about their propane pricing. When comparing pricing, make sure you consider if both tanks are leased or purchased and if the annual volume is similar. If all factors are comparable, then the pricing should be similar. If both propane tanks are leased and have similar capacity, the annual rental fees for the tanks should be similar.
- If you currently lease a propane tank from your supplier and are trying to determine if purchasing a propane tank would save you money, consider the following test: (1) Call two or three propane suppliers in your area and request quotes to install a customer-owned tank with the same capacity as your existing leased tank. Make a note of the average price. (2) For each propane delivery that you receive in your leased propane tank this coming winter, look at your supplier's delivery ticket to identify the number of gallons and the propane price per gallon. Within 24 hours, call other propane suppliers within your area and request a price quote for the same number of gallons delivered to a "customer-owned tank" in your zip code. (3) At the conclusion of the winter heating season, calculate the total amount that you paid for propane delivered to your leased tank, plus the annual tank rental fee vs. the total that you would have paid for propane if you owned the propane tank. These figures will give you a good indication if it makes sense to purchase your own propane tank next summer.
Each propane consumer is ultimately responsible for ensuring that his/her propane pricing is competitive. If it becomes evident during your price surveys that your supplier does not offer competitive propane pricing, it may be appropriate to change your propane service to another supplier. If applicable, the summer is typically the best season to change propane suppliers as the tank replacement process can be completed quickly without weather challenges. Many propane suppliers will change-out your existing tank at no charge, including handling all communication with your former supplier to ensure a seamless service transition.
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