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A beginner’s guide to propane: Price, uses & market overview
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On this page, we explore everything you need to know about propane. Gain insights into propane market trends, pricing mechanisms, and the environmental impact of propane.
Read on to learn more about this popular commodity and find links to beginner friendly guides explaining how you can get involved in propane.
What is propane?
Copy link to sectionPropane is a colourless gas that has been utilised by humans for over a century to cater to various energy needs. Propane was first discovered as a fuel type in the early 1900s. Today, over 20 billion gallons of liquified petroleum gas are produced annually.
Propane is produced as a byproduct of natural gas processing and cruise oil refining. Its affordability and clean burning characteristics mean it is used across homes and businesses daily. From farms depending on propane-powered equipment to home barbeque propane grills, the gas is a competitive fuel choice when electricity proves unreliable or impractical.
Propane market overview
Copy link to sectionPropane is not as popular compared to other commodities and mainly trades on over-the-counter markets. This results in large-scale transactions taking place directly between producers and consumers. However, futures contracts for propane do exist on exchanges like the Intercontinental Exchange (ICE).
The price of propane is more stable compared to other commodities but has still seen its ups and downs. In 2023, propane prices rose due to supply chain disruptions and increased demand.
Is propane valuable?
Copy link to sectionYes, propane is a valuable commodity and there are numerous reasons why investors are attracted to the market. We have highlighted some of these key fundamentals below, explaining what they are and why they matter.
- Propane is easily portable. Being a liquid, propane is easily transported across the world. End users can also easily store propane in households, farms, restaurants and more without requiring expensive pipelines.
- It is more energy efficient compared to other fuels. Propane offers more British Thermal Units (BTUs) compared to similar fuels. This means propane is significantly cheaper to use.
- Propane emits less emissions. Propane is a cleaner fuel compared to heating oil and diesel. Propane combustion emits less greenhouse gasses, and nitrogen oxide, and has almost zero soot. While burning propane still causes pollution, it is far less than other fuel sources.
- Propane is essential for various applications. Lots of industries use propane and view it as a reliable and safe fuel. For example, forklift trucks, crop dryers, and commercial heating systems use propane.
How to invest in propane
Copy link to sectionYou can invest in propane by using a commodity trading platform. These platforms offer a range of commodities and are very easy to use. There are different platforms suitable for specific requirements.
Some let you buy physical propane, others let you trade propane, and many are designed for investing in the grain. Visit our dedicated guide to discover how to invest in propane.
Propane in your investment portfolio
Copy link to sectionA diverse investment portfolio can help protect you during market uncertainty, and the inclusion of propane can add value while allowing you to spread your money across various markets.
Propane often moves independently to traditional investments like stocks and bonds. You can include propane in your portfolio as a hedge against potential losses. During times of economic uncertainty, investors view commodity grains such as propane as attractive options.
Propane vs other commodities
Copy link to sectionPropane is part of the energy family of commodities, including oil, natural gas, and ethanol. Each commodity is unique in its own way and offers different features for investors and traders. You can learn more about specific commodities using our dedicated guides below.
- Oil. Oil is an essential commodity used globally for energy production.
- Natural gas. Natural gas is an energy commodity used to power nations across the world.
- Ethanol. Ethanol is a fuel made by fermenting and distilling sugars from crops like corn and grains.
