The Benefits of Propane Pre-Buy Contracts

The Benefits of Propane Pre-Buy Contracts

Why should you pre-buy your propane? If there is one benefit, it’s this: you lock in a fixed price for the year. This is an incredible benefit, as the fuel market can be extremely volatile. It’s not uncommon to see steep price hikes when entering a new season, but luckily propane pre-buy contracts can help keep your costs down.

Propane is manufactured from the crude oil refining process and natural gas manufacturing. Because of this, the price of propane will usually trend in the same direction as the crude oil and natural gas commodities.

Propane prices can fluctuate on a weekly basis. This fluctuation is caused by simple supply and demand. For example, in the winter months, the demand is typically high, which can cause prices to skyrocket. When the weather is cold, you can expect higher propane prices. As a rule, the more severe the weather, the more you can expect to pay. If you simply need propane for the winter, then it’s easy to watch propane prices in the summer and pre-purchase your propane in the summer. However, if you are like many and need propane year-round, you’re vulnerable to year-round volatility. If you need propane year-round, the solution is simple: pre-purchase a year’s supply worth of propane. By doing this, you avoid the volatility and unpredictability of the propane market.

Lock in Low Prices with Propane Pre-Buy Contracts

Because of this volatility, paying for propane on an as-needed basis isn’t wise. By locking in low prices for the year, you will immediately know what your price is, and you will likely save money in the long run. For example, propane prices usually rise $0.50-$1.50 per gallon during the winter. If you can avoid that price hike by prudently choosing the pre-buy option, you will see significant savings. Let’s say you need 200 gallons for the winter season, and this winter, the price per gallon is an extra $1.50—you will save an extra $300 this winter.

Be Fully Stocked

There are times when there are propane shortages due to an unforeseen problem or crisis. Instead of scrambling to find the propane you need in this scenario, simply pre-buy your propane so that you have the tanks you need year-round. You won’t have to worry about calling to schedule deliveries, remembering to pay your bill on-time, or monitoring your propane usage. By pre-buying your propane for the year, you will have total peace of mind from knowing that you are fully stocked and prepared.

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