Attorney general releases report on propane gas price spikes

(From Attorney General Chris Koster)

Attorney General Chris Koster released a report today detailing the findings of his office's investigation into dramatic price spikes experienced by Missouri propane customers last winter.  In January, Senator Mike Parson and Representative Jay Houghton each formally requested that Koster investigate the possibility of propane price gouging. Missouri consumers reported propane prices spiking from less than $2.00 per gallon in December 2013 to more than $5.00 per gallon in January 2014.

As part of its investigation, the Attorney General's Office conducted numerous inquiries with industry representatives, government entities, and consumers.  The report notes that the Attorney General’s Office reviewed pricing and profit data from a number of retailers to determine if price gouging occurred. Ultimately, state investigators determined that an unusual combination of market forces led to scarcity of propane and higher prices throughout the Midwest.

The Attorney General's investigation concluded that a record corn harvest that was wetter and later than normal, an unusually cold and early winter, and record propane exports that reduced domestic propane inventories converged to deplete Midwest inventories throughout the winter.  Unable to quickly bring sufficient low-cost propane to the region to meet the demand, the market responded with record price increases.  

The Attorney General’s Consumer Protection Division reviewed approximately 250 complaints from Missouri consumers regarding propane prices and interviewed approximately 80 consumers.  Many of the complaints involved retailers failing to honor pre-purchased price contracts or adding rush delivery fees to customer orders. To date, Koster has recovered over $3,000 for Missouri propane consumers and continues to mediate with propane retailers on the remaining consumer 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," said 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."

More than 200,000 households in Missouri rely on propane as their primary residential heating fuel, placing Missouri 12th in the nation in propane consumption. Hundreds of propane retailers serve Missouri's residential and industrial propane market. To protect themselves against future price instability, Koster recommends that Missouri propane consumers:

• 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 encouraged Missouri consumers to contact his Consumer Protection Hotline at 800-392-8222 or file a complaint online if they are concerned about the price of propane.