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Friday, April 11, 2014

First time Buyer – What should I know about propane?

Question - We were out looking at house and my agent said that there was a pig in the side yard of one house. I didn’t see any pigs or cows or chickens or anything else. What was that all about?

Answer - You were probably in any area that is not served by natural gas lines and the “pig” that the Realtor® was referring to is a quaint term for the propane tank that he saw in the side yard. Most homes in very rural areas are heated with propane, which is the same stuff that you might be using in your barbeque
If you want to read more than you really need to know about propane, click here to go to the WikiPedia explanation for propane.

So, what do you really need to know? Well you may have seen stories on the evening news that there was a shortage of propane this winter and that prices were high. Heating with propane is more expensive than heating with natural gas. Propane costs per gallon this last winter were running close to that of gasoline and sometimes higher.  Remembering that pig in the side yard, just imagine the bill to have a truck pull up in your yard and fill that sucker up. It can get real expensive.

One thing that you might often see in homes that have propane for heating is that they usually have electric hot water heaters and electric kitchen stoves. It is just too expensive to heat water and cook with propane every day. Many of those same homes may have electric supplemental heating systems or the owners might have installed alternative heating sources, like wood-burning stoves. Corn-burning stoves are also popular out in the country-side.

The cost of propane is market driven and can fluctuate fairly widely depending upon factors like availability and difficulty in delivery. This past winter the state of Michigan took on one of the larger propane suppliers in the state for what it alleged was price gouging. You can read about that lawsuit by clicking here.

Unfortunately when you get out beyond the natural gas pipelines the alternatives that you have are all expensive. You can heat with propane or you can heat with heating oil, if you want to use a liquid fueled furnace/boiler. You can also go all-electric, which many people do with electric baseboard heating systems. As mentioned earlier, you can also go with wood or other biomass fueled stoves or systems. NO matter what you choose, when you get a winter like the one that we just had it is going to get expensive. Click here to read a story about the costs for Michigan residents this past winter.

Should you avoid homes that are heated with propane? You may not be able to. If you have a locale in mind you just need to be aware of the options that you have for heating and fueling other things in your house. Fortunately the infrastructure to deliver those alternatives is in place everywhere, so getting your propane or fuel oil or electricity is not the issue, paying for it is. You should factor those higher costs into your buying
decision and future budget planning.

So, the next time that you’re out house hunting and you see a “pig” in the side or back yard, the “oink” you hear in the back of your mind will be the thought of the increased costs of living there. But, hey, there are advantages to being out there in the countryside with lots of privacy and maybe a little bit of land; so, suck it up and get used to living with your pig. Just try not to feed it your wallet.

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