When the market is in turmoil, many investors turn to commodities. One lesser-known commodity is propane, sometimes called liquid petroleum gas (LPG). Here’s what you need to know about investing in propane stocks, why the price of LPG and propane can suddenly rise and whether it’s better to buy oil, gas or propane.
Investing in propane stocks means you’ll buy shares in companies that produce and sell propane and LPG.
Exchange traded funds (ETFs) can be a fantastic way to diversify your investment by spreading it across many different companies. As of the time of writing, there aren’t any ETFs that focus solely on propane stocks. You’ll need to look at energy-focused ETFs that invest in a range of fuels including oil, petroleum, propane and renewable energy.
If you need propane or LPG to heat your home, then it may be possible to stock up on propane in case prices continue to rise.
Superior Plus Corp. is an energy distribution business that operates through 2 segments: US Propane Distribution and Canadian Propane Distribution.
The company distributes and sells propane, heating oil, other liquid fuels as well as propane-consuming equipment. Additionally, it rents, installs, maintains and repairs propane and heating oil equipment.
UGI Corporation distributes, stores, transports and markets energy products and related services in the United States and internationally. The company operates through 4 segments: AmeriGas Propane, UGI International, Midstream & Marketing and UGI Utilities.
UGI distributes and sells propane and liquefied petroleum gases (LPG) to residential, commercial and industrial customers. It also operates power-generating stations and provides logistics, storage and other services to third-party LPG distributors.
Headquartered in Texas, Energy Transfer LP owns and operates natural gas transportation pipelines, natural gas storage facilities and processing plants. It also sells natural gas to industrial end-users, electric utilities companies, independent power plants and local distribution companies.
Additionally, Energy Transfer manages coal and natural resources properties, sells standing timber and leases coal-related infrastructure facilities.
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If you’re looking to invest in a clean source of fuel, then consider the advantages that propane has over gas, petroleum and diesel:
It’s hard to argue that propane is a truly “green” fuel, because it’s produced as a byproduct of processing gas and petroleum. Renewable energy sources like solar power, wind power and hydropower are considerably more environmentally friendly.
LPG (liquid petroleum gas) is a byproduct of processing natural gas and refining oil. Propane is sometimes called LPG. However, LPG is actually an umbrella term for several gases including propane, butane, propylene, butadiene, butylene and isobutylene.
Propane, the main type of LPG, is normally compressed and stored as a liquid. It’s nontoxic, virtually odourless and colourless, but an odour can be added to make it easier to detect. Propane is similar to butane but can boil and very low temperatures and is therefore used more often outdoors, whereas butane is often used indoors.
Propane is commonly used to heat homes in rural areas where it’s not possible to connect to gas lines. It’s also used in industrial processing and as fuel for machines and commercial vehicles. When used as fuel for transportation, it’s sometimes called propane autogas.
Many factors affect the cost of energy. But one of the main factors contributing to propane price increases is the rising cost of oil and gas. Because propane is a byproduct of oil and gas manufacturing, when oil and gas prices increase, so does the cost of propane.
Generally, higher supply drives down the price of resources. So, LPG and propane prices could go down if new resources are discovered, energy technology advances, laws benefitting oil and gas producers are passed or political tensions ease between countries that import and export energy resources.
We’ve all occasionally heard about petroleum and oil prices rising, but propane isn’t usually in the news. It’s actually the 3rd most common transportation fuel in the world after gas and diesel. It also has many other uses including:
When the stock market is volatile, investors tend to see commodities like propane stocks as a safe investment. But the energy sector can be volatile, which makes it difficult to predict how propane stock prices will change.
Carefully research any investment before you buy in, and compare brokers to find one that offers the type of investments you want with fees and account requirements that work for you.
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