The price of propane gas explained
At OK GAS, we understand that insight into the pricing structure of propane gas is important for our customers. We strive for transparency. Over the years, we at OK GAS have gained a wealth of experience in the propane gas industry. Our professionals possess extensive knowledge of how market dynamics influence propane gas pricing.
What factors influence the price of propane gas?
The price of propane gas depends on various factors. These include production costs, transportation costs, government levies for suppliers, taxes for consumers, and market demand and supply. Below, we will explore these factors in more detail.
Production costs: The costs associated with extracting, producing, and refining propane gas are the fundamental elements that determine the price. We strive to keep these costs as low as possible without compromising on quality. Taxes: Just like on all other products, the government imposes taxes on products purchased by consumers. Transportation costs: The distance between production facilities and the delivery location can influence the price of propane gas. At OK GAS, we continuously optimize our logistics processes to minimize transportation costs. Market demand and supply: External market factors such as the demand for and supply of propane gas also play a role in price determination. This includes the demand for natural gas and government policies regarding sustainability. Government levies: These include both excise duties and inventory taxes. The graph below illustrates how excise duties have developed over the past few years.
The exact costs per 1,000 kg can be found on the website of the tax authorities.
Increase in propane gas prices 2022
The year 2022 was a rollercoaster for the propane gas industry. The price of propane gas was significantly more attractive than that of natural gas for a period. Due to the war in Ukraine, the supply of natural gas from Russia was restricted. This drove up the price of natural gas, which in turn led to an increase in requests for propane gas. It created a turning point in supply and demand.
The influence of government levies on the price of propane gas
Since July 1, 2023, we, as a propane gas supplier, pay € 344.74 in excise duty per 1,000 kilograms of liquefied petroleum gas (propane). In addition, we also pay € 8.00 per 1,000 kilograms in inventory tax. Together, this amounts to € 352.74 excluding 21% VAT per 100 liters. As a supplier, we therefore pay (converted) € 0.1799 per liter excluding VAT in taxes to the government.
As a supplier, we fill tanks for our customers in liters. For a propane refill of, for example, 1,000 liters, you would therefore pay 1,000 x € 0.1799 = € 179.90 in excise duties and inventory charges.
What do we expect from 2024?
As a propane gas supplier, we expect the price of propane to remain stable. Supply and demand are indeed more stable. This is closely related to the price of natural gas. Despite ongoing geopolitical tensions in both Ukraine and Israel, we anticipate a more stable natural gas price.
The Netherlands has had a year to build up natural gas reserves. As a result, they can continue to supply Dutch households with natural gas this winter.
Do you have any questions?
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