Oil Vs Propane
This year I wrote about comparing the cost of heating with oil versus heating with propane. The two posts that I wrote, Heating – Propane Vs Oil and Oil Vs Propane Fuel Calculator have been read more than any other posts I’ve written. So I thought it would be interesting to mention them again with heating oil around here above the $4.00 per gallon and propane in the $3.00 range. I’ve received lots of requests for the simple spreadsheet I wrote that helps you compare the two fuels for different furnace types and I’ve also received lots of comments and questions on the subject.
Its important to understand where propane comes from so that you can better understand how the price of it is influenced in today’s market. Propane is a by-product from two sources: natural gas processing and crude oil refining. Most of the LPG used in the United States is produced domestically. When natural gas is produced, it contains methane and other light hydrocarbons that are separated in a gas processing plant. Because propane boils at -44°F and ethane boils at -127°F, it is separated from methane by combining increasing pressure and decreasing temperature. The natural gas liquid components recovered during processing include ethane, propane, and butane, as well as heavier hydrocarbons. Propane and butane, along with other gases, are also produced during crude refining as by-products of the processes that rearrange or break down the molecular structure to obtain more desirable petroleum compounds.
The big question that I keep hearing is which fuel will be a better choice given the instability in the oil market. If I knew the answer to that then I would quit my day job and sell fuel! But, if you take a look at the graph below you’ll see that propane prices have very clearly mirrored the crude oil prices in this country. So I would say it’s safe to say that both #2 heating oil and propane will both go up and down at similar rates. As I mention in my previous posts you really should make the decision on other factors and not the price because the price ends up a wash.
Note: Data are not adjusted for inflation.
Source: Crude Oil: West Texas Intermediate Crude Oil Spot Prices as reported by Reuters News Service; Propane Prices: Energy Information Administration, Petroleum Marketing Monthly.
Heating – Propane Vs Oil
Oil Vs Propane Fuel Calculator