“We finished this past weekend with never-before-seen price increases by the propane suppliers of this country. These same suppliers are telling the public that the extreme and unreasonable price increases are a result of increased exports, a wet corn harvest in Minnesota and North Dakota, and a severely cold winter. I believe these are totally bogus excuses used to inflate prices for reasons none other than corporate greed.
Here are some facts surrounding this issue. According to the U.S. Energy Information Administration (EIA), in October 2012 we were exporting approximately 189,000 barrels of propane per day, mostly to Asia, Latin America, and Europe. During October 2013, we exported 408,000 barrels per day. With export numbers at those levels, there is no way the industry wouldn’t know what the results could be for the domestic market. However, it simply let this situation happen with no warning to its customers throughout the Midwest.
Propane prices in the countries to which we are exporting are not as readily transparent as here in the United States, but I have not found any evidence of prices spiking in those areas to the degree we are experiencing here in Missouri. According to a Jan. 24, 2014, article in Bloomberg News, the benchmark wholesale price for propane in Asia was approximately $2.00 per gallon for the month.
In talking with local dealers around the state, there are other issues that have arisen from this crisis. One is that the suppliers who have created this situation are now insisting on being paid C.O.D. by the dealers instead of accepting payment under current payment practices. This puts an extreme hardship on the dealers as they have to look their loyal customers in the eyes and decide if they can afford to help them, knowing they might not get paid for a month or more. Local businesses cannot afford to operate in this fashion.
Earlier today, I read a bulletin from Enterprise TE Products, a company with a major role in controlling pipeline traffic. In the article, it says industry groups and government official are expressing concerns in the media regarding the combination of cold temperatures and supply constraints that are driving up propane prices.
CONCERNS? My concern is for customers who have experienced price increases of 400 percent in 10 days, and it looks as though it might be because of the actions of those very wholesalers.
CONCERNS? My concern is for hard-working Missourians who again face single-digit temperatures in the next few days and have been told they can’t get propane delivered, or if it is available have no way to pay for it.
CONCERNS? My concern is for the Missouri families whose survival and livelihood depends on whether or not they will have propane in their tanks. Those are my concerns and they are not ‘expressed,’ they are real.
In a Nov. 22, 2013, article in Bloomberg News, Ian Taylor, Chief Executive Officer of Vitol Group, stated, “Propane is cheap and getting cheaper and cheaper and cheaper.” Vitol Group is one of the world’s largest oil trading companies.
The article explained how exports of propane from the United States had risen dramatically and were pulling down the price in Asia. The day the article was written, the price of propane at the distribution center in Mont Belvieu, Texas, was $1.20 per gallon, and at the facility in Conway, Kansas, it was within a few cents of that price.
I’m not an expert in this field, but it is becoming clear someone created the actions for a crisis to occur. I, along with other common-sense Missourians, understand that if exports are increased to those levels as we go through these winter months, problems are going to happen. The harsh winter conditions were not unexpected, as experts have been predicting a cold-weather pattern for months.
When we have a leading energy CEO state a few weeks earlier that propane is going to get cheaper and cheaper and cheaper and then the industry claims we are facing a shortage, that story doesn’t add up where I come from. We live in a world of technology that provides us instant knowledge on almost unlimited subjects. For those responsible for this situation to say they didn’t see it coming is not believable. I think they knew exactly what they were doing, and they are now reaping record profits on the backs of hard-working Missourians.
In the past few days we have witnessed an example of extreme corporate greed. I am not opposed to businesses making a profit, because that is how our economic system works. However, with free market principles also comes corporate responsibility to treat customers fairly.
If someone’s house burns because of using too many electric heaters or a fatal tragedy occurs, I hope charges would be filed and those responsible face criminal charges in our court system. I have one final suggestion for the CEOs and board members of these companies: ‘Hire a common-sense Missourian to report directly to you and send them to check your tanks to see if they are running low. It’s not rocket science.’”
