LPG vs natural gas: which should you buy?

LPG vs natural gas: which should you buy?

Many Aussies like to have both electricity and gas connections in their homes, for the simple reason that using gas for heating and cooking can prove cheaper than using electricity. However, there are several places in Australia where natural gas connections are either not readily available (such as Tasmania) or are unaffordably expensive. For these people, buying LPG may be an alternative that gives them the benefits of gas and means not relying entirely on electricity. Both natural gas and LPG have their pros and cons. Deciding between the two will depend on your energy needs in addition to buying electricity from the grid. 

What’s the difference between natural gas and LPG?

In terms of chemical composition, natural gas is a naturally occurring fuel comprising a mixture of gases like ethane, propane, butane, and pentane. It’s often found trapped in underground pockets similar to oilfields. These pockets of gas are tapped, and the gas is piped through distribution networks and retail channels to customers’ homes. This piped supply of natural gas becomes cheaper if the distributor and retailer cater to many customers in a given area. 

In Australia, liquefied petroleum gas, or LPG, usually refers to propane gas extracted from natural gas reserves. Propane gas tends to dissipate more easily than natural gas or its other component gases. As such, it’s sold in a liquified state and packaged in a pressurised bottle called a cylinder or a tank. LPG is sometimes called bottled gas due to how it is stored and sold to consumers. Typically, you can drive over to the nearest petrol station and purchase an LPG bottle or exchange your old LPG bottle for a new one or have it delivered. While you don’t need to worry about distribution costs with LPG, you may need to pay a service charge when buying a bottle.

What are the advantages of using LPG compared to using natural gas?

Since LPG needs to be pressurised and packed in a bottle, it can be easier and safer to transport than through the distribution network used for natural gas. Also, LPG is a processed fuel and tends to produce more heat more reliably for the same amount of fuel as natural gas. This steady heat generation is the reason LPG is also preferred for industrial applications. Its processed nature also renders LPG a cleaner fuel, making it somewhat a more environment-friendly energy source. 

While the per-megaJoule (MJ) usage charges may be lower for natural gas than LPG, the fixed costs - natural gas’s supply charges and LPG’s service charges - are generally lower for LPG. Since using LPG for heating or cooking can prove significantly cheaper than electricity, you may see LPG as a viable alternative for energy supply. Especially if you’re not able to access a natural gas connection or find the costs unaffordable. You may still need to sign a contract with an energy retailer to purchase an LPG bottle. You can often organise regular bottle deliveries to avoid running out and have the gas company install the new bottle. 

Are there disadvantages of using LPG, as compared to using natural gas?

The primary drawback in using LPG is that the capacity of the bottle limits the supply of energy. Since you need to buy a new bottle from a petrol station or get one delivered to your home, it may be wise to have a reserve bottle to ensure there’s no supply disruption. But only do this if you feel confident connecting the bottle to your house. If not, look into regular gas bottle delivery options. With natural gas piped to your home by your energy retailer, you needn’t worry about running out as long as you always stay on top of paying your bill. 

Depending on where you live, you may not have too many options for buying LPG. This may mean you don’t get to compare prices as the choices are limited. In other areas, you may have the option to choose one of several natural gas retailers and select an energy plan that offers the most suitable gas usage charges as well as the best supply charges. Some natural gas suppliers, such as Kleenheat and Origin Energy, also offer LPG bottles. You could compare the LPG and natural gas prices offered by the same retailer and choose which works better for you while keeping open the possibility of switching later.

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How to find cheap gas and electricity?

One of the best ways to find cheaper gas and electricity plans is to compare the plans offered by various service providers in your area. You can compare any perks or discounts available from the retailers and the standard costs and fees. You’ll also be able to calculate the estimated monthly, quarterly, and annual costs.

Be careful choosing based solely on these upfront perks or costs, however. These discounts or lower usage perks may end when the contract or benefit period expires on your current plan. When you compare online, you can often find a better plan. 

Your total energy bill includes supply and usage charges, which vary from one provider to another. You can shop around online to find a retailer that offers competitive prices on these charges and any other fees. Discounts can help reduce your bill, and it makes sense to review your bill and think about how to find cheaper gas and electric providers at least once a year.