Propane prices create concern
High prices in Craig area attributed to lack of supply, overhead costs
December 12, 2001
By JEFF SWANSON
Daily Press writer
Some propane customers in Craig have raised concerns about the high price they are paying for the gas, and according to one Utah propane dealer, they should be concerned.
Propane customers in the Craig area are currently paying between $1.15 and $1.20 for a gallon of the home-delivered gas.
Basin Propane, a company based in Vernal, Utah, is delivering the product to customers in the Craig and Meeker area for 96 cents a gallon more than a 17 percent difference in many cases.
“I really don’t understand it,” said Scott Sowards of Basin Propane. “What it really boils down to is that they are ripping people off.”
Sowards said that Basin Propane purchases some of their product in the Meeker area, so the difference in costs cannot be from a lack of supply.
“I know that we buy some of our gas for the same price that they pay for theirs,” he said. “The only difference that I can see is that we have less overhead than they do.
“We are also an independent company, whereas most of the companies in Northwest Colorado are majors,” he said. “That helps us to keep the cost down, because we don’t have as much to pay for. But it still doesn’t seem right.”
Amerigas spokesperson Maggie St. John of Craig said that just because gas prices are dropping doesn’t necessarily mean that propane prices will also.
“Methane and Ethane are two of the last fuels that are produced by refineries. Because they’re producing more gasoline, that allows gas prices to drop but at the same time they’re not producing as much propane,” St. John said. “Just because there’s a lot of lower gas prices out there it doesn’t mean there’s going to be lower propane prices.”
White River Gas Executive Vice President Dick Welle said that they have three different cost zones for off-truck delivery, depending on the distance their trucks must travel.
“We may not be the cheapest company around, but we like to pride ourselves more on our service and being a local company,” Welle said. “I am aware that there is a company that has been coming into this area from Vernal with much cheaper prices, but it does raise some questions.
“It makes me wonder whether or not they are licensed to sell propane in Colorado if they are able to sell gas for that price.”
Sowards said that Basin Propane is regulated to do business in Colorado, but prefer to do it a little different than the companies located here.
“We don’t like to deal too much with credit,” he said. “We like to deal with cash or checks. It is easier, plus it is another way that we can keep our prices lower than our competitors.”
Propane is not a federally-regulated natural resource such as gasoline, which allows companies to set their own prices.
“We have 49 locations in eight different states, and we all try to maintain the same profit margin,” said Aaron Hampton of V-1 Propane in Hayden. “There are times when different locations have different cost margins, but we try and set a price early in the winter, and stay with it throughout.
“There was a time last year when the natural gas prices were high, and purchasing propane was almost cheaper than using natural gas,” he said. “For the most part, though, natural gas remains somewhat cheaper.”
In-city residential customers are often excluded from using propane because of the eyesores that most propane tanks have on a neighborhood.
For out-of-city customers, though, this makes propane a more viable option.
“Some cities have ordinances against putting propane tanks in people’s yards,” Welle said. “Along with that, not too many gas lines run out into the country, so propane is often people’s only choice.”
For customers who are already locked into a contract with a company, there is some good news.
“From what we have heard there is not going to be any cost increases between now and the end of the winter,” Hampton said. “So what you are paying now, will probably be what you will also be seeing early next year.”