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The Ultimate Guide to Propane: All You Need to Know
This guide collects the most important information about propane. Explore what propane is, how it's made, safety regulations and much more.
Propane, also known as liquefied petroleum gas (LPG), is one of the most versatile and efficient fuels around, capable of powering everything from residential gas grills and hot water heaters to farms and commercial operations. For some, propane might be less frequently used or relied on only as a backup. But if propane powers most of your home or business, planning for price fluctuations can make a big difference in your budget.
While there are many factors that impact local propane prices, this one is arguably the biggest. Since propane is a byproduct of crude oil refining and natural gas processing, propane pricing tends to rise or fall depending on the market prices of those other fuels. Since about 80% of propane originates at natural gas processing plants, you can expect propane to generally mirror natural gas pricing whether it's trending up or down.
For example, when Russia faced sanctions from Europe after the 2022 invasion of Ukraine, their lack of an ability to export propane caused a massive local surplus, leading to a drop in local prices. In fact, the more recent embargo in 2024 led to a 50% drop in propane prices within Russia—showing just how powerfully increased supply can lead to more affordable prices for propane.
In the United States, energy policy and newly discovered reserves have bolstered the natural gas supply. As a result, every year since around 2010, we’ve become much less reliant on crude oil refining to produce our HGLs (Hydrocarbon gas liquids, including propane) than other countries. In fact, in 2022, we derived approximately 13x as much propane from natural gas as we did from petroleum refining. While crude prices do still play a role, American consumers who are curious about propane prices should zero in on the natural gas market to get more accurate indicators.
People less familiar with propane might associate it with gas grills and summer barbecues, but in reality, propane demand peaks in colder weather thanks to its usefulness as a heat source. Whether it’s for residential or commercial propane, increased winter consumption often leads to higher prices. .
If you’ve ever compared propane prices by region, you’ve probably noticed that costs can vary significantly based on where you live. Ultimately, this comes down to how transportation, availability, and infrastructure vary across locations. .
Generally speaking, customers on the Gulf Coast and East Coast tend to pay the highest prices for propane. In both cases, these regions are further from major sources of propane, which results in higher prices. The East Coast also has notoriously cold winters, which spike demand and contribute to higher prices. .
Although the Rocky Mountain region is closer to propane supplies, the challenging terrain and lower population density in those areas can lead to logistical challenges and higher prices. Thanks to its proximity to natural gas supplies, the Midwest has the lowest average prices overall. However, railroad delays and challenging weather can still lead to price fluctuations. .
Any time hiccups occur in the global supply chain or with labor availability, propane costs can shift. Transportation disruptions and refinery downtime or outages can also temporarily increase costs.
In January 2014, a perfect storm of factors drove propane prices sharply higher. A record-breaking corn harvest combined with cold, wet weather boosted demand for propane among farmers to power crop dryers. At the same time, logistical issues on pipelines and rail lines restricted supply movement. The result was a dramatic surge: average prices rose 75% across the U.S. compared to the prior year, and spiked 137% in the Midwest.
More recently, on March 20th of 2025, a propane pipeline leak in Minnesota led to a major highway being completely closed down in both directions for an entire day. While it’s too early to show up in the data yet, it’s easy to understand how events like these impact truckers delivering propane and distributors reliant on pipelines, leading to transient price spikes.
Energy policies, economic sanctions, and conflicts can impact fuel markets and influence propane prices. While it’s hard to predict how these factors will swing prices, that doesn’t stop traders from betting on propane futures in the commodities market. Generally speaking, things that cut off supply, increase demand, or increase reliance on external sources of propane can increase prices.
For example, during the Covid-19 pandemic, demand fell off during early 2020 as the world shut down. In March of 2020, U.S. residential propane prices sat around $1.9 dollars a gallon, and by October of 2020, prices fell to $1.785. But as the world reopened and demand increased, pandemic-related challenges like staff shortages and disrupted supply chains led to huge year-over-year price increases in 2021 and 2022 ($2.37 and $2.99 per gallon, respectively). As the pandemic faded into memory and supply chains normalized, prices dropped slightly in 2023 and 2024.
Propane needs to get from where it’s stored to your home or business. Bad weather can throw a wrench in those plans, and when propane can’t move smoothly, prices go up. In addition, unexpected cold snaps, storms, and hurricanes can disrupt distribution or spike demand, leading to sudden price changes.
For example, in 2014, record-breaking freezing temperatures across the United States led to massive increases in demand for propane. As temperatures dropped, schools, warehouses, and those using propane for commercial heating burned more fuel in a desperate attempt to keep students, workers, and consumers warm. But the supply just couldn’t keep up with demand. As a result, prices skyrocketed, as illustrated on the chart below showing the all-time-high spike right before the 2015 line on the horizontal axis.
All the above factors can lead to surpluses or deficits in propane supply. When inventories are high, prices tend to decrease. But when they drop, propane pricing tends to spike.
You can’t control the weather or global oil markets—but there are things you can do to better manage your propane expenses.
Whether you use propane for heating, cooking, or backup power, there’s a few things you can do to boost your efficiency for cheaper operating costs overall.
While it’s important to boost your energy efficiency, lack of proper insulation can throw all that hard work out the window. Good insulation will allow you to maintain higher ambient temperatures without burning more propane.
When in doubt, getting hot water heaters, stoves, generators, or any propane-powered equipment regularly inspected and serviced is key to preventing leaks and maximizing efficiency.
For example, you can:
Avoid emergency refills and extra delivery costs by installing a wireless tank monitor and signing up for automated delivery.
Monitoring tank levels is only half the battle—when you refill matters too. Filling your tank during the off-season (spring/summer) when demand is lower can help you secure your supply at lower prices.
If it’s feasible and safe, installing larger on-site propane storage can be a smart move. Doing so lets you buy in bulk when prices are cheaper and store up fuel for future use—insulating you from price spikes during peak demand.
Pinnacle lets customers lock in rates or prepay for propane, which can help you avoid seasonal price changes.
If you’re looking to minimize costs and compare propane prices in your area, it’s a good idea to use our local pricing tool to find the most up-to-date propane pricing information for your region.
At Pinnacle Propane, we believe in transparent communication about propane costs. We don’t just deliver fuel—we try to provide peace of mind.
Here’s what that looks like:
Whether you’re a homeowner, farmer, or business owner, our goal is to provide the info you need to navigate propane pricing trends and protect your bottom line.
Contact the team at Pinnacle Propane today to learn more about your pricing options, set up automatic deliveries, and explore price protection plans.
Visit our propane pricing page to get started!
