Every large scale propane user has their own particular set of needs, and every wholesale propane supplier offers different capabilities as well. When your operation needs to select an LP gas supplier, choosing the right one will make for a seamless experience.
Evaluate Your Business Needs
Before selecting a fuel supplier, assess your own business needs. Consider the amount of propane you use, your preferred delivery schedule, your storage and staffing capabilities, and your preferred payment schedule. Be prepared with a list of any special requirements. For example, if you’re a propane retailer, find out whether you might end up competing with the wholesale propane supplier’s retail operation in your area.
Contact the Wholesale Propane Supplier
Contact the wholesale propane supplier to gather information.
· Delivery area: Verify what geographic area they cover, whether their delivery rates are included in the price, and how supply would be delivered to your area.
· Supply sources: Find out what supply sources the LP gas wholesaler is able to tap into in order to best supply your needs and even out price fluctuations over time. Would the supplier have gallons at each terminal that would be dedicated to your operation?
· Convenience: Also ask about policies, service fees, or pricing structures that fit your particular business needs. Are services such as autopay offered? Does the supplier arrange for delivery, and do you know if it is from the most cost effective terminal location? When you ask for pricing, is everything included (e.g. delivery charges, PERC charges, any state taxes)?
· Safety record: Ask questions about their safety procedures, standards, and record. See if the company recommends contacting the state regulatory agency, which would indicate that they are open about their safety record.
· Additional services: If you require services like physical storage, inquire whether those services are even offered. If you are a retail seller of propane, find out whether your wholesale supplier will be competing with you in your market.
Contact Outside Agencies
You can also follow up on certain questions about a wholesale LP gas supplier by contacting outside agencies.
· Regulatory agencies: Each state has a propane regulatory agency or commission to regulate and monitor all activities related to LP gas within the state. This agency may be able to provide specific information about the supplier’s safety record, compliance, and whether or not the supplier is enrolled in any safety programs offered by the agency.
· Professional organizations: Most states also have a propane gas association, so you can verify the supplier’s membership in that organization. Membership in these organizations is one way a company can stay up to date about industry related compliance and safety issues.
· Better Business Bureau : You may also be able to do some research with the Better Business Bureau. Although BBBs are regional, they can often provide valuable information about a propane wholesaler’s history, reputation, and how they have dealt with any past complaints.
Seek Customer References
Once you are considering a particular wholesale propane supplier, seek references from other customers, particularly customers that are similar to your operation. If you need propane for corn drying, talk to another agricultural propane user. If you are an LPG retailer, talk to other LPG retailers. These are a great way to make sure that the supplier you select can meet your needs.
When you are in the market for a wholesale propane supplier, you will find differences in the capabilities of potential suppliers serving your geographic area. Your diligence in seeking out the right supplier for your needs will save a lot of effort down the line. Contact Smith Gas Liquids Company today, to review how we can meet your needs.
In the United States, wholesale propane prices are governed by a unique set of circumstances. Even though propane is a commodity, the factors that influence its price are different even than other energy sources. The main factors affecting wholesale propane price are crude oil and natural gas prices, proximity of supply, production, volumes being exported, weather, and cyclical demand periods.
Crude oil and natural gas prices
LP gas is a byproduct of both crude oil refining and natural gas processing. Approximately 70 percent of the U.S.’s propane comes from natural gas processors, but LP gas competes more closely with the other byproducts of crude oil. Therefore fluctuations in the price of crude oil are reflected in the wholesale propane price.
Our company offers propane supply for your operation from multiple propane terminal locations to insure both competitive pricing and surety of supply. Due to our many years in the propane industry, we know what supply sources are most reliable, and we know how to buy competitively. Contact us today.
Proximity of supply
Transportation costs affect wholesale propane prices as well. Most of our country’s propane is priced based on the distance from the largest storage hubs in Conway/Bushton, Kansas and Mt. Belvieu, Texas. Distance from these supply hubs will add to prices, but the distance from a local supply terminal is also an important factor for both pricing and reliability of delivery to your operation.
Because propane is a byproduct, the volume of propane made available from crude oil refining and natural gas processing cannot be adjusted when demand or price changes. Most wholesale propane in the United States is produced domestically, and propane production in the United States grew 70 percent from 2009-2015. A small percentage is also imported by land or sea routes.
Volumes being exported
To further complicate the overall picture, the U.S. also exports propane, which can reduce the available inventory in the United States at the beginning of the heating season, as it has this year.
Demand for propane increases in the winter due to residential, industrial, and agricultural heating. Winter 2017-2018 is expected to be near average, but cooler than the last two winters. Normally suppliers can build stocks in advance, and any propane produced over predicted demand is exported to other countries. However, if unexpectedly cold winter weather occurs, particularly early in the heating season, wholesale propane prices are often affected because demand will exceed supply.
Demand in one geographical area affects other areas, so a cold winter in the northeast affects wholesale prices as far away as Texas. Weather can also affect prices when weather events like Hurricane Harvey affect production and storage .
Cyclical demand periods
Demand varies within industries and residential use, so wholesale propane pricing generally factors all types of demand together. For example, in years with a robust corn harvest when the growing season has been wet and the crop needs a lot of fuel for drying, corn drying demand affects overall demand. As mentioned before, winter heating season generally sees the highest wholesale propane prices resulting from the need for residential heating. Summer sees more demand from petrochemical manufacturers, which are the largest consumers of propane. Petrochemical demand can have significant influence on the price of propane.
Wholesale propane prices are an ever-shifting landscape, affected by these major factors as well as regulation, energy policy, manufacturing trends, and more. The factors that influence wholesale propane prices are outside the control of even major propane users. At Smith Gas Liquids, we work with propane suppliers across the nation so we can smooth out the bumps in the wholesale propane market for our customers. We work on your behalf to take a bite out of wild prices .
Maybe you’re in the market for a new wholesale propane supplier, and you have several options to compare. Or perhaps your wholesale LP gas supplier relationship has been long and satisfactory, but you want to make sure you’re getting the most out of the arrangement. Any wholesale propane supplier should be happy to answer a few key questions to increase your peace of mind.
1. What is your target market? At Smith Gas Liquids, most of our customers are independent propane retail operations, bulk industrial customers, and agricultural users.
2. Who will do my propane deliveries? Smith Gas Liquids drivers are well-trained in safety and product knowledge, and they drive the most modern LPG transport equipment. Our professional drivers take timeliness and safety seriously. Each customer has their own delivery requirements, and our experienced delivery drivers develop familiarity with each customer over the years.
3. How are you different from other propane suppliers? The service, reputation, and expertise of an LPG supplier is what sets one apart from the rest. At Smith Gas Liquids Company, we offer propane supply for your operation from multiple propane terminal locations, so we can ensure both competitive pricing and surety of supply. Due to our long history in the propane industry, we know which supply sources are most reliable, and we know how to buy competitively. Our service is better because we tailor a supply plan specifically for each customer’s needs/volume. And our custom written software lets us know the most competitively priced propane for your operation as terminal prices change.
4. How would you plan my supply? One of the most important questions is also unique to each customer. Contact our experienced professionals today to discuss how we can best meet your needs. We even offer physical storage to insure against supply disruptions.
5. When is the best time to order LP gas? There is a peak demand season for every region and industry, and if you know your energy needs, you can plan in advance. Make sure your supplier is well prepared to handle your delivery even when you need it during peak demand season. Because propane prices fluctuate based on demand and a number of other factors, talk to a professional to determine whether your order date could affect your price as well.
6. What programs do you offer, or how can I get the best rate? Each business is different, so the best way to make sure you’re getting the best rate for your business needs is to personally review your options with one of our representatives. At Smith Gas Liquids, both the propane and the transportation to your location are included in one delivered price.
7. Can I get a fixed price? Yes, you can get a fixed price, and we offer many different fixed price options. Some of the different options include ratable contracts, non-ratable contracts, and fixed prices on gas stored physically.
8. Will I be competing with your retail operation? Smith Gas Liquids focuses exclusively on "wholesale propane only". We are somewhat unique in the fact that we do not compete with our retail propane clients.
9. How long have you been in the LPG supply business? There is no substitute for a long history of experience in the LP gas business. Smith Gas Liquids has been serving the needs of our propane customers since 1983.
If you compare wholesale LP suppliers based on these questions, you will probably be able to find the supplier that will best meet your needs. But if you have further questions, or if we have left something out, please contact us.
Some recent history can provide insightful information when we look ahead at propane pricing and inventory in the coming months. According to the E.I.A. national inventory report , the winter of 2013/2014 saw the U.S. witness the most challenging inventory control in the propane industry. The supply and distribution levels hit he lowest minimum witnessed in the recent past. As a result, the executive committee of the National Propane Gas Association’s (NPGA) directed the formation of a "Supply and Infrastructure Task Force" with an aim to address the various challenges faced by the wholesale propane industry and to avert a future repeat of that supply/price crisis.
The task force emphasized that there’s no “one size fits all” solution to the propane supply and distribution challenges. Each year comes with its set of challenges and the solution must be customized to each market segment, the source of supply, client base, and several other factors.
Production and Export of Propane
According to a recent ICF study, the production levels of propane in the United States grew by 70% between 2009 and 2015 and continues to grow. The new supply growth has been used to feed a growing international appetite for propane. During 2017, over 10 billion gallons of propane will be exported from the U.S. This is almost all new since the winter of 2013/2014. That having been said, propane exports are projected to fall substantially over the next several months as the arbitrage spread between the domestic and international prices continue to close. Between May and June, 24 export cargos were either canceled or differed, and the export rate to Japan drastically dropped as the country reached its minimum inventory levels of about 40 million barrels . As more propane supply moves to the international markets than the domestic market, international developments continue to exert more pressure on the propane balances and prices in the U.S.
Peak Weather Demand
The last two winters have seen most Americans experience warmer than average temperatures. Now, many consumers feel reluctant to enter into long-term contract agreements with marketers to take proactive approaches to plan for winter fuel requirements. However, when temperatures drop and fuel use increases, marketers have always been expected to be in a position to meet the immediate demands of their customers. Before the issue of exports came to be, marketers had no problem meeting the domestic "will-call" demand.
Midstream companies have also been affected by the last two warm summers. According to RBN reports, a number of midstream companies have indicated they plan to minimize inventories held for consumer markets to maximize returns. The onus is being put on the retail marketer to store barrels for their home market and "pay up" to avoid having required propane sent to export.
Obviously, all the factors discussed causes increased pressure on propane marketer to anticipate and respond to various unforeseen situations on the demand and supply of propane. One way to stay ahead of the competition is to build a close relationship with a primary supplier, and enlighten consumers on the need to plan for winter energy consumption beforehand.
Planning for Propane Supply
The question on many propane marketers’ minds is, will I get access to the amount of propane I require to supply my clients in a cold winter? The answer lies in their ability to properly plan ahead of time to deliver propane to your customers. Against the backdrop of a record production and export levels of propane, it makes sense to rely on the assistance of an expert versed in propane supply.
With the record domestic propane production levels, there’s adequate supply to meet the consumer demands. Choosing the right propane supplier with the experience and knowledge of which producers and terminals are reliable and cost effective for your business could be critical. Working with Smith Gas Liquids Company gives wholesale customers a "Sure Thing" guarantee on price and supply reliability. To request pricing information simply fill out the quick form on our secure website here.
Smith Gas Liquids Company is an independent wholesale propane company servicing buyers in North America who demand an affordable, ultra-reliable propane supply. Wholesale customers benefit from state of the art marketing, tracking and account information technology that provides real time data and transparency. www.smithgas.com
For the propane business, it's not just changes in the USA like the seasons which drive large changes in supply and demand these days. Politics with Russia can affect the Ukrainian pipeline, reduce Europe's gas supply, drive prices up from demand and cause USA-based suppliers to ship product overseas. In fact, the US is the number one LPG exporter, notes Butane-Propane News (BPN) .
Ensuring a steady supply of affordable propane to end users takes a skilled wholesale propane supplier who watches the world and keeps ahead of the market.What are some of the hot issues on the world energy market today? How could they affect wholesale propane prices and supply?
Global Customers Keep Production Rising
Demand is keeping ports like Houston busy sending huge tankers to nearby markets in the Americas and far-away destinations like Japan and China. American exporters are increasing capacity to feed into a busy global market, but that can make life more complicated for LPG consumers at home, too. What's next?
Busier than a Chicago Air Traffic Controller
There are a lot of issues on the radar of energy management professionals which might affect wholesale propane prices. Here are a few for 2017, from the World Energy Council :
To really understand the market and how it affects the price of propane delivered to a customer's door, the analyst has to keep track of all this and much more, and good news today can simply be a sign that the winds of change are coming.
Low Prices Make Analysts Sweat
Really low prices from oversupply can make future-oriented analysts start to prepare for change. LPG businesses need their margins to expand, and when prices get tight they need to take action. That can mean taking production equipment off-line until prices rise and selling mainly into more profitable markets. The local LP supplier is left dealing with customers who don't understand why prices keep changing. "It's the heating season" isn't the simple explanation it once was.
Big Changes in World Shipments
Lately, export numbers for propane have been phenomenal -- 84.1% increase in a year, reports BPN. That's a loud call for correction in prices or supply. Which of those is most likely depends on other factors like how the related crude oil market is doing. It, too, has been facing the challenge of low prices. Energy is a critical component of the world's operation and growth, so demand will continue to rise, but at what price? And again, how does this affect home heating customers?
Wholesale Propane Suppliers Help Create Balance
In addition to predicting what's going to happen on the volatile world market and preparing for US-based suppliers' responses, a wholesale propane supplier has plenty of tools for helping to create balance for customers in a complex world. A lot of the techniques sound like stock and commodities market terms, like hedging and price management , and they are very similar in a lot of ways.
By using their understanding of markets and their product, they can make deals and commitments that help stabilize the price they charge for propane, even in an active, unpredictable market. After all, big price changes affect everyone and can make life miserable for home heating customers, small businesses, and others who run a tight ship. Stable, predictable costs can help a lot.
Energy Affects Everyone
Managing wholesale propane prices is just one of many ways that Smith Gas Liquids company can be a sure thing as your company's propane supplier. Learn more about various wholesale propane sales agreements for your company by requesting a call today .