Btu Valuations

What is a Btu?

A Btu (British Thermal Unit) is the amount of energy required to raise the temperature of one pound of water one degree Fahrenheit.

Table 1 shows the Btu value for various energies. To compare the values on a propane equivalent we first convert the values to a MMBtu (1 million Btu’s). You take the energy’s price and divide it by its MMBtu’s. Natural gas is priced on a MMBtu basis. We then multiply the amount of propane Btu content per MMBtu (.0915) to get the propane equivalent value. It’s a simple calculation but reveals the true energy value of the commodities from a propane perspective.

In tables 2 and 3 you can see how this calculates for crude oil and natural gas. There are 138,095 Btu’s in a gallon of crude. There are 91,500 Btu’s in a gallon propane. So to compare crude to propane, propane should be 66.26% of the crude value.

Correspondingly, when we compare propane to natural gas, propane should be 9.15% of the value of natural gas for the same energy value.

Table 1: Btu Valuations

CommodityBtuMMBTUPrice ExamplePrice per MMBtuPropane Equiv $/Gal
Propane ($/gal)91,5000.091500$0.520005.6830600.520000
Natural Gas ($/MMBtu)1,000,0001.000000$5.000005.0000000.457500
Electricity ($/kwh)3,4140.003414$0.0508012.8799061.361511
Crude ($/bbl)5,800,0005.800000$30.00005.1724140.473276
Fuel Oil ($/gal)138,6900.138690$0.840006.0566520.554184
Gasoline ($/gal)125,0000.125000$0.950007.6000000.695400

Table 2: Crude Oil

Crude OilBTUsPrices
CrudeBtus per Barrel5,800,000$30.00
CrudeBtus per Gallon138,095$0.7143
Propane Btus per Gallon91,50066.26%
Propane Btu’s as a % of Crude66.26%$0.4733

Table 3: Natural Gas

Natural GasBTUsPrices
Natural Gas1,000,000$5.000
Propane Btu’s per Gallon91,5009.15%
Propane as a % of Natural Gas9.15%$0.4575