The Joplin Globe, Joplin, MO

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January 27, 2014

Missouri politicians look into price gouging after propane spike

Rising propane prices have prompted some Missouri state senators to call for an investigation into why the typically abundant gas has been running low and putting a strain on people’s budgets.

Prices for propane nearly tripled last week at the Midwest supply and distribution hub of Conway, Kan.

State Sen. Mike Parson, R-Bolivar, on Friday asked Missouri Attorney General Chris Koster to see if companies are price gouging.

“I think we need to step in and do something about it,” Parson said. “To do nothing is not an option.”

Parson introduced a Senate resolution Monday asking the U.S. Department of Justice to also investigate the issue.

Koster, in a statement issued Monday, said his office “is investigating the cause of the recent rise in the price of propane gas, and will issue a report when the inquiry is complete.”

Koster said 40 consumers have filed complaints with his office’s Consumer Protection Division.

Koster’s office said the reports indicated that the price charged for propane has increased from about $1.94 per gallon in December 2013 to about $5 in recent days.

“Missourians are justifiably concerned about the dramatic increase in propane prices, affecting their ability to heat their homes and care for Missouri-based livestock,” Koster said in the statement. “We are currently investigating all complaints, and working with businesses and agencies in nine other states across the Midwest to determine the cause of these price increases.”

Senate President Pro Tem Tom Dempsey, R-St. Charles, released a statement supporting Parson’s call for a state investigation.

The Missouri Propane Gas Association said it is working to increase propane shipments and raise the supply, steps that would lower the cost and boost inventory. Executive Director Steve Ahrens said low propane inventories this year are caused by an increase in exports along with high demand because of cold weather and abundant crop yields.

Propane can be used to heat homes, and it also is used to dry corn before it can be stored after a harvest. Ahrens said a boom in hydraulic fracturing, or fracking, technology and shale gas also has led to more propane production than ever before, which has prompted companies to seek more propane buyers overseas.

He said existing contracts with international buyers prevent companies from diverting propane shipments domestically.

Parson, however, alleged that corporations are trying to price gouge and make big profits by lowering the supply.

“I hope they prove me to be wrong,” he said. “I just don’t think there is any doubt about it. There is not any question they are going to make millions of dollars.”

U.S. Sen. Chuck Grassley, R-Iowa, meanwhile, sent a letter last week to the Federal Trade Commission asking for oversight of the propane market. Grassley noted, as have many retailers, that the price for propane at Conway, Kan. — one of two primary propane storage sites in the United States — has been significantly higher than the price at the other site, in Mont Belvieu, Texas.

“I request that the Federal Trade Commission remain vigilant in overseeing the propane market to prevent possible anti-competitive behavior or illegal manipulation, and to ensure that any supply shortages are not created artificially,” Grassley said in his letter.

Spot prices for propane at Mont Belvieu on Thursday were $1.50 a gallon. At Conway, which supplies most of the Midwest, prices surged Thursday to nearly $5 a gallon — up more than $1 a gallon from Wednesday’s price. Some retail suppliers reported paying $5 a gallon on Friday at Conway.

Phone messages left for officials at the National Cooperative Refinery Association of McPherson, Kan., which operates the Conway propane hub, were not immediately returned. A spokeswoman for CHS Inc., of St. Paul, Minn., which owns nearly 75 percent of the National Cooperative Refinery Association, said she was unable to find anyone at the company who could comment on the rising propane prices at Conway.

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