Oil prices have shown a rapid growth from 2001 to 2008, driving the propane prices above the expectations and reducing propane’s effectiveness in many competitive markets. Oil prices in the world are also likely to continue with high volatility in the market. The propane industry had to take advantage to solidify existing markets with relatively low world oil prices. Consequently, the propane market has to deal with the consequences of higher prices to develop new markets.
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The prices for propane are changing more rapidly than for electricity and natural gas. These rapid changes in propane prices will influence consumer perceptions about propane, which will in turn increase the level of uncertainty and risk associated with choosing propane. The propane hedging program, will help in minimizing the volatility and reducing the negate impact of price volatility on consumers. Propane-fueled engines produce less air pollution than gasoline engines. Hydrocarbon emissions are 30% to 62% lower in propane fueled engines.
The demand of propane market wedges is expected to add more than 500 million gallons per years by 2018 if the opportunities in this market are fully realized. In 2010, 8.4 million residential households consume about 5 billion gallons per year of fuel oil for heating up their homes, which is equivalent to about 7.5 billion gallons of propane. The households in North-eastern U.S., primarily in the New England states, New York, New Jersey, and Pennsylvania consumed 80 % of propane.
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