Wholesale vs Retail Propane Price: Understanding the Spread
Wholesale propane traded at the Mont Belvieu hub recently quoted at $0.788 per gallon. Residential customers in the US recently paid an average of $2.674 per gallon. The difference is $1.89 per gallon, or roughly 3.4-fold. This page explains why.
What is Mont Belvieu?
Mont Belvieu, Texas, is the primary natural gas liquids (NGL) trading hub in North America and the spot benchmark for almost every propane gallon in the US market. The benchmark price is published daily by OPIS (Oil Price Information Service), now part of Dow Jones, with EIA publishing a daily series of its own (eer_epllpa_pf4_y44mb_dpgD) and FRED mirroring it as DPROPANEMBTX. Front-month propane futures trade on CME (formerly NYMEX), settling against the Mont Belvieu cash benchmark.
Mont Belvieu is the price at which an NGL trader can transact a rail-car or pipeline-shipment of propane at the hub. It is not the price any homeowner can transact at. Treating Mont Belvieu as a consumer price is the most common analytical mistake on propane-pricing pages elsewhere.
The spread, broken down
The components below sum to the total spread between Mont Belvieu and residential. The dollar shares below are typical ranges (cited from OPIS market structure notes, NPGA distributor cost materials, and EIA Heating Oil and Propane Update narrative); they vary by region, by distributor, and by contract type.
| Cost component | Approximate range ($/gal) | Note |
|---|---|---|
| Wholesale benchmark (Mont Belvieu spot) | $0.79 (the floor) | EIA daily series |
| Pipeline transport to regional terminal | $0.05 to $0.20 | Depends on distance from Mont Belvieu |
| Regional terminal storage | $0.05 to $0.15 | Higher in cold-storage-deficit regions |
| Tanker truck delivery to local distributor | $0.10 to $0.25 | Driver hours, fuel, hazmat compliance |
| Local distributor margin | $0.30 to $0.80 | Variable; reflects local competitive density |
| Tank rental amortisation (where applicable) | $0.10 to $0.30 | Customer-leased tank, no separate fee |
| Seasonality buffer / risk premium | $0.10 to $0.40 | Hedging cost for distributor's winter exposure |
| Regulatory and hazmat fees | $0.02 to $0.10 | State and federal compliance |
| Implied retail residential | ~$2.67 | EIA US average, week of 30 March 2026 |
The line items are illustrative ranges drawn from OPIS market structure references and NPGA distributor cost materials. Any individual customer's quote sits within the spread but rarely breaks down identically; tank rental and contract type are the two largest variables.
Why the spread varies by region
The persistent regional ranges in the EIA per-state data reflect four structural factors: distance from Mont Belvieu (Gulf Coast pays close to wholesale; Northeast pays the most because it sits at the end of the pipeline network), regional pipeline density (TEPPCO and Cochin in the Midwest reduce delivered cost), winter severity (cold states carry a higher risk premium), and distributor competitive density (rural states with co-op distribution tend to run tighter spreads).
Iowa, the lowest-priced state in the EIA survey at $1.66 per gallon, sits in PADD 2 with strong co-op distributor density and direct pipeline access to Conway. North Carolina, at $3.45 per gallon, sits at the end of Plantation Pipeline territory with rural distribution distances spanning the Coastal Plain and Piedmont. The spread to wholesale differs by nearly $2 per gallon between these two states for structural, not transient, reasons.
When the spread widens or narrows
The spread widens in cold winters (distributor risk premium rises as winter exposure becomes a binding constraint) and narrows in mild winters. The 2014 polar vortex and the 2022 supply disruption both saw the spread spike: in 2014, residential rose much faster than wholesale because retail distributors locked in their summer fills before the weather turned. In 2022, wholesale spiked first; retail caught up over weeks to months.
Across the 2025-2026 heating season, the spread averaged close to $1.85 per gallon, finishing at $1.89 for the week ending 30 March 2026.
What this means for a homeowner
Knowing the wholesale price is useful as a sanity check. The homeowner cannot transact at wholesale, but a supplier quote that is roughly $1.50 above Mont Belvieu plus normal regional margin is reasonable, and a quote that is $3.00 above Mont Belvieu in the same region warrants getting a second quote. The spread is structural; it will not shrink to zero. But it should not be wildly different from a neighbour's spread within the same county.
Mont Belvieu is published daily by EIA and FRED; you can sanity check your supplier quote by computing (your quote) minus (Mont Belvieu) and comparing against the table above. If the gap is well above $2.00 per gallon, the distributor margin or seasonality buffer is unusually wide for your region.