Why Are Propane Tank Prices Going Up?

If you have been considering investing in a new propane tank this year, you may have noticed a spike in prices recently. What gives? Read on to learn about the steel tariff and how it will affect the cost of propane storage tanks for customers on Cape Cod and across the country.

What You Need to Know

Earlier this year, the United States implemented new tariffs on imported steel and aluminum. Imported foreign steel is subject to a 25% tax and imported foreign aluminum is subject to a 10% tax. Both are a major increase, which means companies that use steel or aluminum to manufacture their products are paying more for the materials. This, in turn, causes manufacturers to charge consumers more for their products.

Who Will Be Affected

The Propane Industry
In July, LP Gas Magazine interviewed Michael Sloan, the managing director of ICF’s Natural Gas & Liquids Advisory Services.[1] Sloan said, “In the short term, the tariffs on steel and aluminum are likely to lead to a significant increase in the costs of the raw materials used in tanks, pipes, vehicles and other equipment used by the propane industry.” This means manufacturers of common equipment (like propane storage tanks or bobtail vehicles) will have to pay more for their materials, which could cause the manufacturer’s rate for finished products to increase.

Propane Customers
Butane Propane News (BPN) reported that “purchasers of propane tanks are already experiencing the effect of the tariffs, as some suppliers have begun to announce price increases, said Bruce Whitney, Vice President, Propane Group, Granby Industries (Granby, Quebec, Canada).”[2] It comes down to the basics of supply and demand. The demand for steel materials in the United States outweighs the current supply of domestically produced steel. So, manufacturers that use either domestic steel or foreign taxed steel will pay more for the material and potentially rise the prices of their products.

The Good News for Propane Customers

While the sound of more expensive propane storage tanks may sound scary, the verdict on the long-term effects of the steel tariff is still out. Propane continues to be an affordable and safe energy option that produces minimal emissions. While the tariffs may lead to higher prices for high-cost capital items used by the propane industry, the cost disadvantage should decrease over time as the U.S. increases supply.[3]

Have questions? Contact Snow’s to learn more about current propane tank pricing.

[1] LP Gas Magazine

[2] BPN

[3] LP Gas Magazine