Posted on 01/28/2014 8:42:14 PM PST by topher
Cash Price Propane: Mount Belvieu, Texas
Tuesday, January 28, 2014 - $1.5114
Previous Day's price - $1.5155
Year ago - $0.8411
Natural Gas, Henry Hub $5.240 [1/28/2014]
5.750 [Yesterday]
3.191 [Year Ago]
(Excerpt) Read more at online.wsj.com ...
Add the price of the Haz Mat Certified driver(s) for the same miles, plus a comparable value for the truck time and see what you get for profit. Those propane trucks are not sitting around idle during winter, they are already working for a profit.
It is why several states have waived the laws for limited driver hours during this time.
If conditions are exceeding design requirements, he needs supplimental heaters during that time.
This is sick...people’s lives are at risk in this cold. Gouging on prices no doubt!
http://townhall.com/columnists/walterewilliams/2004/03/24/price_gouging/page/full
http://townhall.com/columnists/thomassowell/2004/09/14/price_gouging_in_florida/page/full
So how many without propane today went into winter with a tank that was not full, gambling on a yet lower price?
I just filled up my barbeque tank in southern Texas for $2.69 a gallon.
We didn’t gamble. We are on automatic fill.
In years past, we would get filled at 40% or lower. Starting this December, the trigger for auto fill went down to 30%. Our December bill, received in January noted without comment that the auto fill would not take place until the tank was at 15%.
This summer, there was no *summer fill* price. We are operating without price contracts. Our December fill to 400 gallons was at $2.29, .40 above last year. Driver showed up Monday, we were below 30% and quoted $5.69/gallon. He added that as of last week it had been $7/gallon retail. We have a woodstove and use Coleman heaters and electric heaters sparingly to keep the pipes from freezing. Our propane water heater normally keeps the cellar at 40F on waste heat.
There is no cost benefit to an electric water heater, as we would need supplemental winter heat in the cellar for longer and to a higher temperature. On-demand has problems of initial expense, lime buildup, longer rise time and reduced ability to get hot water to more than one faucet.
The supplier takes their own sweet time when called for a fill, but shows up immediately in the past as soon as the contract period was up and they could raise the price. Changing suppliers is a nightmare. The tank must be dry or there is a $100 charge to pump it out. There is also a $75+ charge for *no use*. Changing in the middle of subzero temps on hilly ground is difficult to impossible and likely would have to wait until Spring after the ground dries out.
We are on a budget payment plan which has gone from $110/month to $184 month as of this winter. We are current, with a cumulative budget payment excess of $860 over the past several years.
We keep the 2 wall furnaces set at 60 day and 55 night and almost had a pipe freeze Monday night even with supplemental heat in the cellar and the faucets set to drip.
Our business must use hot water and that is probably the majority of our use on a year-round basis.
My charges for 289 gallons 2 days ago were $1609. $11 was fees and hazmat. This weather has decreased our business income, on top of the economic problems caused by zer0care and taxes. The discretionary income that supports us has dried up as everyone is being hammered. We had our bill down to a bit over $500 before being slammed on Monday. It would normally be paid in full by April and we would then pay the budget amount every month so that our first Fall fill would be paid for.
We have 2 tanks. The shop tank is still 60% full, which is normal for this time of year and will last until thaw. We have managed to keep some savings even with the past 5+ years of zer0. Paying for just this one winter fill means we cut all our discretionary spending for the next 6 months.
Now, I know folks locally who are heating with natural gas and who are paying 33% more this month. People are seeing over $500 for natural gas and electricity right now. Few of us can keep that up for long.
No one gambles on a lower price in Wisconsin after October. People do count on steady prices to manage their budget. Blaming the consumer of an essential such as heat for opportunistic increases of this magnitude is distasteful. This was a perfect storm of things gone wrong.
Anyone who wants to blame us, go ahead and philosophize about supply and demand and bitch about those getting fuel assistance. The grant for fuel assistance in _up to_ $500 paid directly to the supplier, but the money comes from a pool and it is first come, first served based on severity of need and if not released by April and if the customer then owes what the supplier considers *too much*, no fill is forthcoming until the balance is paid.
Extraordinary circumstances require flexible responses by all parties involved. If this continues, it could decimate the economies of the involved states. zer0 is in Wisconsin this week, so let’s see his response. Most of the people affected voted for him twice and the impact of freezing people and freezing pipes may wake some of them up. There are already complaints around the area that Walker’s response was to make low interest loans available to suppliers and an extra grant to the low income fund, while it is the working middle class being hurt the most.
Every Midwestern Governor has declared a State of Emergency over this. Heat is life at these temperatures and no one is immune. All Midwestern rural commerce runs on propane and the economic effects will be felt everywhere, over time.
Those sitting in the South and West can be non-emotional about the dangers of extended sub-zero temperatures and high winds/snow, all of which contributed to this along with the infrastructure and logistical failures. How the industry and the involved governments could not foresee the possibility of disaster is in question. If there is propane in storage, then, by definition there is not a shortage. The price increases are all over the board, by supplier and change day-to-day. It is difficult to see how the flow of this commodity could be harmed or lessened if policies were instituted to keep the price within reasonable bounds.
My best friend from childhood lives on a farm in central Illinois. It costs him, at $5 a gallon, $4,000 to fill up his propane tank. A tank lasts him a month. Best friend from childhood is now looking to move into town.
In years past, we would get filled at 40% or lower. Starting this December, the trigger for auto fill went down to 30%. Our December bill, received in January noted without comment that the auto fill would not take place until the tank was at 15%.
I hope the population raises holy heck over the problems this created for many. From my perspective, it was an attempt to trim business cost beyond common sense.
Extraordinary circumstances require flexible responses by all parties involved.
There has been some of that. Many states involved waived the hour limit on drivers delivery propane, and that included Texas which wasn't involved on the short end but on the supply headed out.
Heat is life at these temperatures and no one is immune.
I do understand that even living now along the Texas Gulf coast. We used to live in Alaska.
The price increases are all over the board, by supplier and change day-to-day. It is difficult to see how the flow of this commodity could be harmed or lessened if policies were instituted to keep the price within reasonable bounds.
Price controls have NEVER led to steady supplies. They lead to shortages, eventually, in all cases over enough time. If you want government interference in your market, ask for minimum storage levels, mandated refills at 40~50% during late fall and winter.
Price controls will keep out those not involved that would provide emerency life-supporting help when all else fails.
It is my understanding that the bumper corn crop in the Midwest was damp so a whole lot of propane was used to dry it causing the limited supply. Was that bumper corn crop going to make E85 gas? Who knows.
I do understand the economics re: price controls. But, from speaking with the driver, my supplier has no shortages. This is Ferrellgas and they have not the best reputation. Unfortunately, their MO over the past decade has been to buy up every small supplier they can and many of us inherited them. In some areas, they are accused of bullying competitors to keep them from *poaching* *their customers*, even when the customer is looking to change suppliers. In other areas, they are accused of charging extra for filling under 200 gallons/time. They routinely charge above a reasonable profit compared to the DOE listed wholesale and residential prices, up to $1/gallon over other, smaller suppliers. The market is rigged in their favor because it can cost $175+ per tank to switch suppliers. They will refuse fills outside of midwinter if someone is carrying an amount payable that they consider excessive. This excessive amount doesn’t ever seem to be actually listed in writing.
I do think life necessities could survive economically with a percentage cap on sudden seasonal non-contractual price rises. Competition would force the gougers to offer summer fills at a lower rate and price-limited contracts for the heating season.
You wrote:
Price controls will keep out those not involved that would provide emerency life-supporting help when all else fails.
________________________________________________________
Whom would that be? All that has been offered the public is *warming centers*, which do nothing to address burst pipes and do not offer a place to sleep. Waiving driving rules and loans to suppliers does not address gouging. Both benefit suppliers.
Are you advocating gouging because it will stimulate charity? There is no charity. Even the churches limit help to members and can only do so much for an ongoing consumable need like heat. Those within the system who are in the most need (ill, children, elderly) and who meet income guidelines have *a chance* at qualifying for *up to* $500 as a one-time grant paid to the supplier, depending on the size of the grant pool and the amount of money available. Applications can take weeks and I have seen this happen to people in the past. Sometimes things happen: chimneys fail, illness strikes, breadwinner dies, etc etc.
Telling people that gouging is acceptable because reasonable rules MIGHT limit charity (that MIGHT exist, let alone manifest)is ridiculous.
While some small suppliers were shut out of receiving product, the large suppliers had plenty and my driver was crowing about that. This was not necessarily a shortage caused by demand, either. It was caused by poorly thought out policies at governmental levels and lack of forethought in logistical and maintenance areas of supply. There was no shortage of pre-filled cylinders (20# and 100#) and they went up a modest 10%.
It did not happen in a perfect capitalist society where work is plentiful and economic shocks are moderate. The economy is so distorted already, mostly in favor of protected classes, including cronies, that piously citing the horrors of economic distortion that can destroy property and kill people or make them ill is, at best, facile.
We have laws up here that forbid eviction or turning off of heat and utilities from October to March. Our Governors have rightly declared a State of Emergency. These same Governors cannot find any legal justification to address propane price gouging, yet, in addition to the anti-eviction or denial of power laws, we have state laws against price gouging for gasoline and slamming for telecom.
Seems to me that a customer-oriented policy would benefit business. It has always benefited mine.Personally, I think anything that is more than 10% over the area average for essential commodities should be rebated back to the customer. I also am questioning whether one supplier of life essential commodities should be allowed a monopoly or a virtual monopoly in their region.
Your local supplier may not have a shortage, but there are other midwest supplier that have a real shortage now. If your local supplier is using shortages in the news to justify his own price spikes, it gets rid of that situation faster.
I do think life necessities could survive economically with a percentage cap on sudden seasonal non-contractual price rises.
I greatly disagree. And history has shown it to never work the way you describe.
Competition would force the gougers to offer summer fills at a lower rate and price-limited contracts for the heating season.
Why doesn't that happen now? Limiting the profit potential will limit others from trying to enter the market to compete.
Are you advocating gouging because it will stimulate charity?
I have not advocating gouging. Please don't put words out for me I did not say or imply.
This was not necessarily a shortage caused by demand, either. It was caused by poorly thought out policies at governmental levels and lack of forethought in logistical and maintenance areas of supply.
Not only by supply, but certainly contributed significantly since the supply had the biggest draw down over a single week compared to the last two decades. It was combined with rail and pipeline outages at the same time.
I also am questioning whether one supplier of life essential commodities should be allowed a monopoly or a virtual monopoly in their region.
If a true monopoly exists, other competitors should be allowed to compete.
I’m in Ohio and will have propane delivered today. I’m expecting $3 a gallon.
(1) There is a shortage caused by a sudden surge in demand, caused by cold weather, which exceeds standard delivery infrastructure.
(2) Getting more propane up there via non-standard methods costs more.
The law of "supply & demand" went out the window awhile back.
Example:
We have an abundance of oil, while the U.S. consumption rate is down, yet the price at the pump stays above $3.00. According to the law of "supply & demand" we would expect the price at the pump to drop.
It doesn't happen because story after story is manufactured to keep an excuse in place to charge WHATEVER the TRAFFIC WILL BEAR and keep prices inflated.
Propane, along with natural gas have fallen prey to these same tactics.
Propane prices will suddenly drop when the temperature goes back up.
I don’t think it’s a “gouge”...
would you rather have what you barely need for $5,
or none at $1.50?
Because you know that if the prices weren’t high,
people would be buying up way more than they need just because there’s a possible shortage.
(see: ammo)
Oil is a global commodity and global consumption has risen with production. We produce far more than we recently used to, but we still import nearly half the oil we run through our refineries.
Propane prices will suddenly drop when the temperature goes back up.
Amazing. The demand for heating fuel will decrease with the rising temperature and you still think demand isn't part of the equation?
We almost need 3 different heat fuels for backup since we don’t know what the gubmint is going to regulate/restrict next.
Wood for your stove is next.
Commodity prices are pretty much controlled through market futures and no longer by the supply and demand equation.
Interesting that you think market futures are not driven by supply and demand.
They must be busy [here in Louisiana] for me to see two of them.
Of course, it may be on mind more so I will notice the trucks...
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