With the extreme propane pricing fluctuations during the 2013-2014 winter, Americans (especially those in the Midwest) are wondering what they can do to protect themselves from another expensive winter. Some propane suppliers may offer a fixed or ceiling rate in the summer, but if you missed that, your choices are limited for this year.
Most folks only have two choices: Buy a tank or rent it. Although rent-to-own hybrid arrangements do exist, they are rare. Let’s look at the pros and cons of owning a propane tank.
Pros of Owning a Tank:
- You get to shop and negotiate the best rate! Unless you own your tank, you don’t have the freedom to shop. No other supplier can fill your tank, so you are stuck with the rate that the supplier who owns your tank offers.
- No more minimum annual consumption fees or rental costs. When you rent or use a propane supplier’s tank, you are paying for the rental costs. Whether it’s a line item on your bill or not, the propane supplier is recouping the cost of their asset on your property. They may do this by raising their price per gallon above what you would get if you owned your tank.
- You can customize your tank. You can chose the color of your tank or paint it yourself.
- Stay within your comfort zone. When you own your propane tank, you get to choose the tank size you’re comfortable with. For many, sizing a tank so that you only need to buy in the summer when rates are low is a big incentive.
Cons of Owning a Tank:
- If you have a leak, that’s lost propane. I don’t think I need to elaborate here.
- Tanks are not cheap. Coming up with $400 to $2,000 to buy a propane tank is hard for most people. And even if that kind of money is accessible to you, you would probably much rather spend it on something fun.
- If you go, the tank goes. If you sell your property, you likely won’t find a buyer that understands the value of your investment. However, you can sell it or take it with you.
- The liability shifts to you. I would not advise owning a tank unless you have insurance. Accidents happen whether you own or rent a tank, but the owner is liable if the tank caused a mishap because of undetected repairs needed.
- You lose out on some perks. If you rent, propane companies are responsible for the safety of their own tanks. They should maintain the leased tanks and repair any issues with the equipment without charging you. While this isn’t always the case, they should pay close attention to required service and maintenance of the tanks and regulators for the protection of their customers. But don’t let this give you a false sense of security. I have spoken with many people who bought a house with a propane tank and they were unsure if it belongs to them or the supplier. Even the supplier doesn’t know! If a supplier’s records are that bad regarding ownership, are they really proactively keeping the equipment up to safety standards?
Ultimately, you will have to weigh your options and decide what the best decision is for you. Payback on a tank purchase takes about 3 years for the average consumer. After that payback, you’ll get $400 or more in savings each year for the life of a tank (which is at least 30 years).