The cost of propane is now higher than the cost of gasoline. The prices are so out of control, state governments are starting to take action.
KANSAS CITY, KS (KCTV) -
The hot water heater at the home of Will and Danielle Mears is fueled by propane, but the furnace is off at the newlywed's home.
Instead, they are camping indoors with a mattress on the floor.
"We are having to sleep in our living room next to the wood burning stove," Danielle Mears said.
"Luckily, I have a wife who is OK with sleeping in the living room and filling up firewood eight times a day and two times in the middle of the night," Will Mears echoed.
The Mears are one of two families renting tanks from Ferrellgas who contacted KCTV5 about bills this week charging more than $6 for propane.
Nationwide prices have risen by more than $1 per gallon just in the past week. Still, the rate Ferrellgas charged the Mears is at least a dollar more than what other companies quoted them.
"I honestly feel like we are being price gouged," Will Mears said.
Mike Roberts, who lives in Gardner, KS, was charged the same amount as the Mears family when Ferrellgas delivered his propane on Tuesday - a whopping $6.35 per gallon.
His concern was the same. If you rent your propane tank, you can't price shop. You have to use the provider that owns the tank. He's contacted the Kansas Attorney General's Office about the pricing.
"I cannot stress enough that we are not gouging our customers," said Ferrellgas spokesman Scott Brockmeyer. "This is an unprecedented time in our industry."
Prices in the industry have reached record highs this winter. Brockmeyer says there are several reasons for the spike involving both demand and distribution. There was a record demand in agriculture last year and an increased demand this winter due to frigid temperatures nationwide. To boot, a major distribution pipeline required repairs this fall.
The average wholesale price in Kansas last year was $0.80 per gallon. Two weeks ago it was $1.54. Last week it was up to $2.07. Then, Friday, Saturday and Sunday, it was $5.
The jump is considerable, but it doesn't explain why Ferrellgas charged $6.35 on a day when another company quoted a price of $3.80.
The owner of that other company didn't want to be named because he can't manage taking on new customers, but he said he's kept his price low thanks to a combination of luck, savvy and certain aspects of small-scale business operations.
He bought a large amount of propane on the wholesale market before prices spiked, unaware that they would. Once they did, he had a small enough customer base and demand that he was able to pick and choose when to buy wholesale. Prices fluctuate dramatically day-to-day, he said, and though he still has to pay far more than he used to, he can jump on a $3 price and wait out the $5 days.
Ferrellgas, on the other hand, is the second largest propane provider in the nation. Wholesale prices vary widely state-to-state, but with a large nationwide customer base, being choosy is a luxury.
"We are pulling product out of every supply point in the United States," Brockmeyer explained. "A number of propane companies in Missouri are out of gas. We are proud of the fact that we are finding it and distributing it to customers."
For Will Mears, it's a lesson he is taking to heart.
"That's why small business is as important as it is," he said. "Sometimes small is better. A lot of times small is better. I will never go with a big company ever again."
He can't get a new tank installed until spring. But until then, his propane is for hot water only.
Three $50 electric space heaters work at night to keep pipes from freezing. Long johns stay on inside, and the living room bed at the fireplace is something he and his wife are happy to have. And their two Australian shepherds don't seem to mind the chill one bit.
Meanwhile, Ferrellgas is telling customers to re-order when their tanks get to 30 percent rather than waiting until the last minute because the wait for refills is five to seven business days.
Copyright 2014 KCTV (Meredith Corp.). All rights reserved.
Wednesday, July 30 2014 6:43 PM EDT2014-07-30 22:43:54 GMT
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