Buying propane now can lead to savings
The heat may be soaring, but John Garrard and his family are thinking about how to heat the house when snow starts falling. They recently converted from a wood stove to an all propane system.
“We’re used to paying about $500 for propane a year, but this year we expect that amount to triple,” he said.
To save money, Garrard contracts propane during the summer at a lower cost.
“Contracting is a tool people can use to protect against higher prices,” said Jon Vopat, manager of S & S and Propane.
S & S has been contracting propane for 25 years.
The idea is to lock in cheaper prices during the summer before prices spike in the winter. Buyers sign a six-month contract that runs roughly from October to March, depending on the company.
“Our customers mostly sign up after the Fourth of July until Labor Day,” Vopat said.
Local propane provider Cardie Oil offers a similar program to its customers. The difference between the two companies is that Cardie offers two, two-week periods to contract, one in June and one in August.
According to Vopat the advantages are better budgeting for winter expenses and protection against price increases. The downside is not knowing when to lock in the lowest price.
“Budgeting is always important,” Garrard said. “If you know that the cost is going up on an item, it’s only logical to buy ahead and save the money while you can.”
Propane is a byproduct of natural gas. Because of an increased production of natural gas, prices have stabilized in recent years.
“Ten years ago, we saw big swings in prices,” Vopat said. “Hopefully those days are over.”
Although prices remain mostly stable, since propane is a traded on an open market, prices tend to fluctuate as demand and surplus dictate.
If weather is still cool after the contract ending date, then customers will have to pay current industry prices to fill their tanks.
“There’s no limit to what we can contract,” said Garrard. “We buy what we think we will need, and if we’re short then we buy at market price.”
Last modified July 3, 2013