AG report: Markets drove propane price hike

Market forces, not price gouging or manipulation, were responsible for the winter jump in propane prices, Attorney General Chris Koster concluded in a report Tuesday.

According to the findings from the attorney general’s office, propane prices increased largely because of inventory shortages in the Midwest. Significant factors contributing to that shortfall were record propane exports and increased demand from heavy propane use before winter started for drying a record corn crop harvested late and from heating needs during a colder winter that started earlier.

“Unable to quickly bring sufficient low-cost propane to the region to meet demand, the market responded with record price increases,” the attorney general’s office report stated.

Lawmakers earlier this year asked Koster’s office to investigate propane price increases. Consumers reported prices spiking from less than $2 per gallon in December to more than $5 a gallon in January. More than 200,000 households in Missouri are heated using propane, and the residential sector uses more than half the state’s propane.

Koster’s office examined information from propane providers, compared historical data to pricing during the past winter, investigated consumer complaints and spoke with industry and government representatives.

The attorney general’s office said most Missouri consumers who contracted for propane this winter at a set price or at a maximum price didn’t see price increases the contracted propane this year. However, consumers who bought propane without a pre-purchase faced the burden of the price spikes.

Koster’s office said it received isolated reports that a pre-purchase contract had not been honored and is conducting a preliminary inquiry into two propane retailers to determine whether additional steps are necessary. The attorney general’s office says it received about 250 comments related to propane and has been involved in mediating 75 cases. Officials say they have recovered more than $3,000 for consumers.

Numerous states confronted propane problems this past winter. For example, governors and federal regulators loosened transportation rules in numerous states in the South, Midwest and East so truckers would have additional hours to deliver propane at bulk storage locations in the South before heading north.

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