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AG’s Office Finds No Price Gouging in Winter Propane Cost Spike

JEFFERSON CITY, Mo. -- The Attorney General’s Office says several factors drove up the cost of propane for Missouri customers last winter and says they could continue in future winters, but price gouging was not one of them.
JEFFERSON CITY, Mo. -- The Attorney General’s Office says several factors drove up the cost of propane for Missouri customers last winter and says they could continue in future winters, but price gouging was not one of them.

In a report released today Attorney General Chris Koster says low propane supplies from November through the winter were mixed with high demand due to a record corn crop that was wetter and came in later than normal, and an unusually cold and early winter. Propane exports also set records and cut into domestic supplies, and changes in recent years to the path propane must take to the Midwest make it hard to quickly redirect supplies when demand spikes.

Koster says his office talked to propane industry representatives, government entities and consumers and reviewed pricing and profit data from retailers looking for evidence of gouging. It also investigated about 250 complaints from Missouri consumers regarding propane prices and interviewed 80 consumers. It has recovered more than $3,000 for Missouri propane consumers and continues mediation on other complaints.

“While our investigation concludes that market forces drove higher propane prices, we are still actively responding to complaints from Missouri propane consumers on a case-by-case basis,” says Koster. “My office will continue to examine each circumstance to determine if propane suppliers violated Missouri consumer protection laws during this period of price instability.”

The report cautions that the production, infrastructure and export patterns to which it attributes the price spikes of the winter of 2013/14 could continue into future winters. It offers several suggestions to consumers to protect against future price instability.

Those are:
  • Consider a pre-purchase fixed price or maximum price plan offered by propane dealers during warmer months.
  • Consider the supplier’s track record and reputation, and shop around. Some suppliers have a greater ability to access inventory during times of peak demand.
  • Research whether it makes sense to own or lease a tank. Consumers who own their own propane tank often have greater flexibility in choosing a supplier, while those who lease must often only purchase propane from the tank owner.
Koster’s office conducted the investigation at the request of Senator Mike Parson (R-Bolivar) andRepresentative Jay Houghton (R-Martinsburg).  Consumers reported spikes in propane prices from less than $2.00 per gallon to more than $5.00 per gallon from December 2013 to January 2014.

Read the full report here
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