Notes

Existing Propane Prices
Recent Liquid propane Price Movements

Propane prices have been over a downward flight since the latter fifty percent of 2008. Several factors affect the price of propane, but its steep decline throughout the past 12 months is usually due in order to its strong connection to crude oil prices. As all of us are now coming into the winter season we can expect propane prices to be able to rise slightly, just about all else equal. The cost of crude oil will certainly be a better component and any well-defined changes in the particular associated with crude will certainly have a much more radical affect on liquid propane price levels compared to typical seasonal aspects.

Factors Affecting Gas Prices

Inputs


um Price of A bit crude Oil: strongest effect on the associated with propane
o Price of Natural Gas: though useful for processing, not necessarily as substantial

Supply/Demand Factors

Because desire is seasonal there is an disproportion between inventories inside of the summer and even winter months. Need for propane is usually low in summer time months and because inventories build up downward pressure is exerted on rates. As propane price forecast commences to increase throughout winter months months in addition to the temperature falls in the Us northeast propane rates are pulled in the contrary direction. Household usage of propane is dependent highly on weather conditions. This is actually the key cause of improved demand in the winter. Similarly the agricultural sector features a need for propane in the late fall, throughout the time household ingestion starts to creep up. The petrochemical sector on the particular other hand is definitely much more flexible in its alternatives which is able to take advantage involving the shifting requirement by purchasing propane in the summertime when prices are usually low.

Transportation Costs

The farther your own source of commodity future trading supplies is the particular higher the vehicles costs you pay will probably be. While these kinds of prices are regarding the most component stable, if there is the major change in your supply origin it could affect typically the costs you pay out for transportation.

Long term Prices

Since commodity future trading prices are forecasted to remain in current levels right up until the world overall economy rebounds within the upcoming years, the cost of gas can also always be supposed to remain comparatively stable. There are course will be in season fluctuations as stated before, nevertheless generally propane prices will continue to mirror that involving crude oil. You should consider that whilst crude oil prices are usually widely believed to have little probability of increasing considerably, these markets are extremely sensitive and unstable. Any adverse innovations could easily impact the price that traders are willing to pay for this specific commodity and this would have a matching affect on typically the price of gas.

Propane Price Spikes

The inventories that will build up in the course of the summer offer a cushion since the winter months take place and demand begins to overtake source. This is predicted and the cause the inventories will be allowed to develop in the initial place. However occasionally there is a winter season that may be unusually cold or even long and this particular can put additional pressure on materials and prices. A typical example as if chilly weather hits early on in the warming season and coincides using the high need of farmers within the fall. This may be a shock to be able to demand that was not constructed into objectives. If there is an abrupt disruption on supply it may have the same effect. So can the mere wait in the shipping and delivery of a key shipment. In these types of instances there may be a new drastic spike within the price of gas that is certainly uncorrelated in order to input prices. These types of spikes are just temporary and prices sooner or later return to more normal levels while market participants respond to the circumstances.

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