Retail prices for "deliverable fuels" such as propane, fuel oil, kerosene, diesel fuel and gasoline are not controlled by government regulation (unlike natural gas or electricity, whose prices must be approved by the Public Utilities Commission), and are instead determined by the free market. This page provides consumers with information on what factors affect those prices.
Factors that retailers need to consider in setting prices are numerous, and may include their own costs, as well as what franchise owners advise or require them to charge. These considerations may be less obvious to consumers than the belief that a retailer might be charging what the market will bear - something that may or may not be part of the mix. Free market factors can lead to price reductions, as is sometimes seen in the intense competition between retail gasoline stations. This is the advantage (and peril) of a free market economy and customers who believe the price set by a particular retailer is too high may always seek out a lower cost from a competing supplier.
In the case of propane, there is an additional factor that can influence your price: Propane companies charge different per-gallon prices depending on the consumption volume history of each customer account. OSI specifies the consumption volume when surveying propane dealers' prices for inclusion in our Fuel Price Data page. We request the price for the consumption volume tier that includes 925 gallons. If you consume less per year, for example, under 700 gallons, you may be charged more per gallon than our average price. If you consume more than 1100 gallons year, you may be charged less per gallon than our average price. Not all companies have the same volume/price "break" points, but they all break at some multiple of 100 gallons such as 700-900 gallons and 901-1100 gallons.
The Energy Information Administration has produced "Energy Explained" pages that provide further information on factors that affect fuel pricing: