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Propane industry confident heading into heating season

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Jim Leute
August 5, 2014

JANESVILLE--While it's never wise to bet on Mother Nature, a propane industry official believes the industry is poised to avoid a repeat of the shortages and price spikes that crippled consumers last year.

“The difference between where we are this year and where we were last year is night and day,” said Brandon Scholz, managing director of the Wisconsin Propane Gas Association.

Folks who heat their homes with propane don't need a reminder of what happened last winter.

For those who do, here it is in a nutshell: Many crops were planted late, which resulted in a late harvest that also was uncharacteristically wet. The demand for propane to dry crops went through the roof in October and November.

“And then, before you could even blink, we had snow and cold that never seemed to leave,” Scholz said. “It was Economics 101: short supply and high demand equals price surges.”

Last year, John Arndt of Milton Propane said some local customers were forced to pay more than three times what they typically pay for propane.

At the time, Arndt said it was the worst industry crisis he'd seen in 30 years.

Mindful of last year, the industry has adopted a couple of strategies heading into this heating season, Scholz said.

“Nobody is taking their eye off supply, and the producers are trying to build in as much as they can,” he said.

Local distributors also are pushing to get contracts done and tanks filled earlier this year, he said.

That helps consumers protect themselves against price surges later in the season.

Scholz acknowledged that some contracts were broken last year.

“The dealers had used up what they planned to deliver later and had to go out and buy on the open market,” he said. “Some contracts were broken, and the state did get a couple hundred complaints out of the 250,000 propane users in the state.

“Some contracts had 'force of nature' clauses that allowed it because it was beyond anyone's control.”

In Wisconsin, the industry is pushing education and summer fill-ups, he said.

That helps dealers better handle and forecast inventory for the winter.

Scholz said some people referred to last winter's woes as a "perfect storm."

Despite the best planning, it could happen again, he said.

“There are some things we can't control, one of them being weather and the other being production,” he said. “All indications are that production is high, but it's like a garden hose.

“You can only turn it up so high and get so much out of it.”

Sandy Chalmers, administrator of state's Department of Trade and Consumer Protection, said energy experts are advising consumers to plan ahead for their propane needs by looking at options and buying early.

“Propane suppliers offer a wide variety of pricing agreements and delivery options, and consumers are more likely to get a better price when they buy early,” she said. “Research options, ask questions, and get everything in writing.”

Chalmers said propane contracts set the terms of the agreement between a propane marketer and a consumer.

“Make sure you read and understand the terms of the contract before you sign,” she said. “Pay special attention to provisions on added fees and surcharges and how credits and refunds will be applied.”

 



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