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Why Do Propane Prices Spike? Thrifty Propane Truck
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Propane prices occasionally spike disproportionately from what is expected from normal supply/demand fluctuations. The main cause appears to lie in the logistical difficulty of obtaining resupply during the peak heating season. Because propane is produced at a relatively steady rate year-round by refineries and gas processing plants, there is no ready source of incremental production when supplies run low. Propane wholesalers and retailers are forced to pay higher prices as propane markets are bid higher due to dwindling supply. Consequently, higher propane prices are simply passed on to consumers. Imports do not offer much cushion for unexpected demand increases or supply shortages due to long travel time. On the other hand, when propane prices spike, the petrochemical sector may cut back on its use thus freeing up supplies for other uses.

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