Legislative Column for the Week of Jan. 27, 2014
Propane Problems
 

JEFFERSON CITY — While in the middle of winter, some Missourians are facing an unforeseen, yet disastrous, issue. It is no secret that, within one week, the price of propane has nearly tripled. We need answers to our questions: Why did this happen and how do we correct it?

There appear to be several reasons. Even though the United States exports propane, we experienced a shortage here at home last fall when wet weather forced many farmers to dry grain using propane. That, combined with bitterly cold temperatures so far this winter, has certainly put a dent in our propane levels. However, there might be a third reason, as well.

Many of my colleagues and I have called upon both our state Attorney General and the U.S. Department of Justice to investigate concerns of price gouging by major producers, or, at the very least, major market manipulation by propane manufacturers. This week, Senate Resolution 1168 was filed in the Senate, urging the U.S. Department of Justice to investigate this massive price jump and our country’s lack of propane. It looks like companies are possibly lining their pockets with the hard-earned dollars of American families and businesses. An investigation is currently underway, and we need answers. Missourians deserve better than this kind of financial abuse. This is a difficult time for some families in the 21st Senatorial District and across the state, as well.

With these combined factors, many small propane distributors have only a limited supply, if any, propane. They can’t sell large amounts, because they don’t have it available. Some local distributors have had to travel as far as Texas and Mississippi just to pick up what little propane is available. Large product hubs and manufacturers are no longer accepting previous payment arrangements, and are requiring cash up front. Local distributors often have to wait up to four weeks for payment if their customers are on a four-week billing cycle. However, the amount of cash necessary is simply too high for many. The small local dealers are providing what they can to local families and are certainly not at fault for this situation. They are each doing their best to purchase propane at the lowest price in order to pass that savings on to the customer. If they have to buy it at an increased price, they can’t be expected to lose money. It appears that what we really need to examine are the manufacturers.

In talking to local propane dealers, approximately five weeks ago, propane hovered around $2 per gallon. Last week, one could practically watch prices rise on an hourly basis, climbing to $3.50. And then there was an overnight jump of 70 cents, immediately followed by another increase of up to 85 cents the next night, for a total of $1.55 in 48 hours, making prices near $5 a gallon. That means that the average 200-gallon propane tank went from approximately $400 to $1,000 to fill. That kind of jump, for families who may be on strict budgets, often means making the decision between having a warm home, providing food on their table or paying other bills.

According to the U.S. Energy Information Administration, our country has increased our propane exports between October 2012 and October 2013 by 219,000 barrels per day, from 189,000 to 408,000, with more than 42 gallons per barrel. These massive amounts of exports are sent mainly to Asia, Europe and Latin America. It should have been clear to industry leaders producing such high volumes that the United States had increased its demand on a product we produce right here at home.

As always, please feel free to contact me or my staff with any questions or concerns at any time. We look forward to hearing your comments and suggestions and trying to answer any questions you may have. You can reach us by phone at 866-277-0882 (toll-free) or 573-751-2272, or by fax at 573-526-7381.