We are moving to a house that uses propane for cooking and hot water, and eventually as part of a hybrid solar/propane backup system for when the electrical grid is down. I need to choose a propane company.
There are three propane suppliers in my area. One was just acquired by Amerigas, which claims to be "the nation's largest propane company" (US); one is a large national company (Suburban Propane), and one is a family-owned local company (since 1941).
Normally I would go with the local family-owned company, but as petroleum prices rise and we face the prospect of shortages, would it be in my best interest to be with one of the larger companies? I'd like to be strategic in my choice. I could base it on their current prices, but that seems shortsighted. The house is currently serviced by Suburban.
Help me figure this out...thanks.
Consider buying the tank. Here in Michigan it is a little difficult to buy one, but after a half dozen phone call you can find one. You can also buy one from Craigslist some times.
Once you own the tank, you can buy from anyone. They usually require a "gas check" for about $75, but they will often even wave this.
We are only planning to get a little propane for outdoor cooking (can't use the glass cooktop to run the pressure canner). I had not thought about which would be a better supplier. Our home is located four miles from major propane supplier Amerigas' terminal for an underground pipeline. While there are many other suppliers I have to assume they are all using the same terminal so Amerigas will probably be the cheapest. Nevertheless, there is a very small supplier within a mile and it might be worth our while to make a local connection. I will be watching for comments on this thread.
When I researched the various propane suppliers available in my area it quickly became apparent that all of them wanted me to commit to a leased tank of theirs for supply. The cost of the propane/lease agreements varied a bit from one source to another but very consistently the spot price was much less than any of the contracted lease-supply agreements. The simple truth is that it's such a bother to change out a tank from one supplier to another, and the various pump out, removal and reinstallation charges so high, that few people will move to a new supplier once committed to a lease. This has the net effect of permanently locking in a given supplier since no company will fill the tank of another. In the end, I chose to buy my own tanks and now have the option to shop around and find the best price whenever I need to and, as long as I'm asking for at least a hundred gallons delivered at a time, there's not a problem getting them to deliver to me. I'd ask each supplier a simple question...how much is your propane for a leased tank (delivery charges included and after any "honeymoon" deals tied to the the initial fill) versus a spot price for the same amount delivered to a tank I own? Do the math and the answer should become clear. The beauty of propane is that it can be stored for long periods of time without deterioration and with the price nearly always going up it makes sense to buy a bigger tank(s) and store it than to have more frequent, lower quantity deliveries.
Here in Central Pa. we were able to pre-buy 650 gallons for $2.39 a gallon and that locks in our price for the year. I dont know if this is good or bad as it seems to vary drastically from area to area. Hope this is helpful to give you an idea of what rate is local here.
When I did a bit of research it seemed to jump from $1.50 - over $7.00 a gallon throughout the 50 states.
Thanks, everyone! We decided to do two things:
a) We're going with the small local company, because their prices are significantly lower. I asked them why, and they said that the price is heavily affected by transport costs (i.e., distance the propane must be trucked) and nationwide suppliers have to average their costs over all of their customers. This particular company gets their propane nearby and delivers it in a local radius. They also have low overhead because they are a local, family-owned, frugally-run business. I visited their office, and true to that description, it's pretty bare-bones.
Their price for propane is $2.32/gal including discounts for paying by cash/check (10c/gal) and owning one's own tank (usually 30-50c/gal).
The other companies have a flat price of $3.99/gal and $3.27/gal. They both say the price is the same for everyone, even if you pay cash and own your own tank. They also say the rate goes up and down frequently. These prices were quoted for a 120-gallon tank with an estimated yearly usage of 250 gallons (which is what the previous tenant and the owners used).
b) We are buying a new 120-gallon tank. We do not have to sign a contract with any one provider, and we can get a fill-up from whichever one has the cheapest price.
The guy I spoke with at the local company started telling me about how inflation will help the tank pay for itself in no time (we expect 4-5 years) and that price increases are just around the corner, but he thinks propane will do better than heating oil, for some reason I didn't quite get. And then he started saying some verrrrrry familiar things. Turns out his brother follows Chris and introduced him to some of the concepts we explore here. I'm glad to know my propane (and heating oil) guy is on board and able to see what lies ahead, at least as well as any of us can at this point. He's also on the local energy action committee -- sounds like a thoughtful guy who is actively working to evolve his business ahead of the curve. At this point in the conversation, he had a customer.
I feel good about these decisions. I like that owning the tank allows me to remain free of any obligatory relationship with a supplier.
Deal with the local supplier. Just because a company is national does not necessarily make them better. Many times there will be extra fees with the large company.
However, now you have taken on the responsibility of maintaining the tank. That means you must keep it painted, you must make sure the tank remains in certification and not out of date especially if the tank is of DOT construction and not ASME construction. If a problem develops with a valve in the tank, you as owner are responsible for repairing it or hire it to done by a propane company. If a tank is deemed unsafe to fill by a company, what do you do?
We use a local company and one of the best things I like about them is that they can work with you on the amount to be delivered to fit your budget and that they keep a running log of the per gallon price on their website. Goes back all the way to 2004. Very handy to see the seasonal adjustments in price and year to year changes.
http://www.acepropane.net/ (click on the "check our prices" on the left side)
Ed, when we installed the tank we talked with the installers (also the local suppliers) about maintenance. They assured me that they check the tank with every fillup and will alert me when maintenance is needed. I think that as with anything, it's important to be proactive in maintaining what we own. I think it's safe to assume that any supplier who wants to continue getting my business will help me keep my tank in good working order, provided I take the lead as necessary to ensure that it will get done.
I continue to be impressed with the service and attention I get from the local supplier. Have recommended them to many people who didn't realize there was such a difference among suppliers.
However, in the past year, I was able to get solar hot water installed, which will drastically reduce my propane use. The propane hot water tank is backup to the solar. I still think we made the right choice based on what we knew at the time. I am also glad to have a very large backup supply of fuel relative to our needs.
It's a learning experience. I've been happy with these decisions, and it's nice to be able to look back and say that.
Armstrong Distributors is an online portal which deals with the manufacturing of auto parts.
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