Spring Brings Opportunities to Save with Propane Contracts
April 29, 2021
Written By Adam Buckallew
Beginning in May, MFA Oil customers will have the opportunity to lock in prices with propane contracts for next winter.
The MFA Oil Pre-Buy Program allows individuals and businesses to contract a predetermined volume of propane at a set price. Spring and summer are traditionally great times to contract propane. Pre-buy contracts are available from May 3 to Sept. 15.
The Pre-Buy Program provides protection against volatile market swings and demand surges that are common during high-demand winter months. The average U.S. residential propane price increased by more than 52 cents a gallon, or 30 percent, during the 2020-21 heating season, which began Oct. 1 and ended March 31.
While there’s no guarantee today’s prices will be lower than market prices next winter, propane contracting has proven beneficial from a historical perspective.
“If you look back at the last decade, booking a propane contract would have helped you save money in seven out of ten years,” says Tim Danze, MFA Oil hedging manager.
Export Demand Growing
According to data from the U.S. Energy Information Administration, exports of U.S. propane hit record levels in 2020, increasing by 13 percent to more than 1.2 million barrels per day. The swell in exports was enough to make propane the top U.S. petroleum export product. Propane exports surpassed distillate fuel oil for the first time.
“We’ve been monitoring propane exports from a supply and demand perspective for several years now and it’s finally to the point where we see a meaningful impact,” Danze says. “Export volume is now one of the biggest factors for U.S. propane prices.”
Danze recommends that customers review their propane usage from past years and pre-purchase the gallons they would typically need. Locking in a predetermined price can help with budgeting heating expenses in the coming year.
Options for Propane Contracts
MFA Oil offers three convenient ways for customers to participate in its Pre-Buy Program.
- 100% Pre-Buy. Pay for a full year’s supply of propane in one upfront payment at a locked-in price.
- 4-Pay. Split your payment into four even installments – one when you sign up and one in each of the next three months.
- Budget Plan. Make a down payment, then divide the balance over the remaining months through the following April.
To learn more or sign up for a propane contract, contact your local MFA Oil office.