FOX 11 Investigates: Propane shortage

An estimated 250,000 people in Wisconsin rely on propane to heat their homes. Diane Engels is one of them.

“We’ve been really cold for quite some time,” Engels said.

She’s also one of the more than 100 people who filed complaints with the state over how much they were charged for the heating fuel.

“My locked in rate was no longer going to be honored,” she said.

Engels says she thought her rate with Milton Propane was supposed to be locked in at $1.749. But when she bought 100 gallons of propane on January 27th she was charged $5.499 per gallon. That’s more than three times higher.

“I’m thinking, ‘Where in the heck am I going to pull that kind of money out?’ So I threw it on a credit card and all I could afford is 100 gallons,” Engel said.

Engels called the company to complain but got nowhere.

“Because my contract was a locked in and not prepaid therefore they could throw it out on some clause on paragraph five,” she said. “They could throw it out the window and they could charge me whatever it was because it was an emergency market situation.”

When asked if she thought that was fair, she replied, “Absolutely not.”

FOX 11 Investigates went to Milton Propane’s headquarters in southeastern Wisconsin for an explanation.

When asked if a locked in rate was subject to change, owner John Arndt said, “Well, it was this year for the first time in almost 50 years.”

Arndt says he charged higher rates to some of his customers for 12 days. Those who paid upfront still got their locked in rates. But others, like Engels, didn’t. Arndt says that’s because his supply was very limited during that time. In fact, one of his suppliers backed out of its contract with Milton Propane, saying in a letter on January 17th that it had to “…cease deliveries immediately…”

Arndt says with prices sky rocketing and supply tightening, he didn’t have much choice but to pass along the higher costs.

When asked what he would say to customers who are frustrated they paid higher rates, Arndt replied, “I guess like the contracts I have that are written to me, if they don’t come to fruition how do you back the ones you have with other people? So you take a look at it and say the ones that had a signature on it with money paid in, since I was getting half of my allocated contracts, I agreed to do business with them and took care of them for that 12 days. The others I didn’t and I used a clause in our contract to be able to get out of that.”

FOX 11 Investigates asked Arndt if that was fair to the customers.

“I think most people were very humane about it. I didn’t have, probably not even a few people that forcefully objected to it,” Arndt said.

When FOX 11 asked Brandon Scholz, managing director of Wisconsin Propane Gas Association, if anyone was to blame for the propane situation, he replied, “Well, there are lots of fingers pointing at lots of things.”

Scholz says propane dealers are in a tough spot.

“The market fluctuation in driving the propane that high can put dealers out of business,” he said. “So what they’re trying to do is manage their business by saying look, I’m sorry. I’m paying $4.20 for propane that you had at $1.80 and I have to charge you more. Otherwise, they will go out of business.”

So where is the money going? With prices tripling, you would think someone has to be making money on the situation.

Joe Bukowski from Countrystyle Propane in Oconto Falls insists it’s not the local dealers.

When asked who, in his opinion, is making money off the situation, Bukowski replied, “I guess that’s beyond my knowledge. To me, when gas is worth a certain price on the 20th of January and on the 27th of January it’s worth three times as much. I guess, where is that money going?”

“It ain’t going to me,” Bukowski continued.

“There are a lot of fingers being pointed, oh, you’re price gouging. You’re just jacking up the price,” Scholz said. “I can tell you that wholesale suppliers and dealers really are not in a much of a position to price gouge because it will ruin their business.”

Since propane is a commodity, the price is determined by the market. Scholz says that puts the propane producers in position to profit.

“The supplier is buying it from the producer so the producer has wholesalers from all over the country trying to buy propane. That’s what happens with supply and demand. When you have high demand from wholesale suppliers going to producers, they’re going to charge more because they can,” Scholz said.

Arndt also blames the producers. When FOX 11 asked Arndt who is making money off the high price of propane he said, “I would presume the refinery slash cracking process from the crude and the different refineries down in the Gulf area.”

Arndt’s theory is that the shortage has a lot to do with the massive propane exports.

According to the federal government, in November, propane companies shipped more than 410,000 barrels of propane a day out of the country. That’s the highest amount of propane exports ever. And it was right in the middle of the peak propane season.

But at this point, that’s just a theory. The bottom line for customers like Diane Engels is that answers, like propane, are in short supply.

“I don’t mind prices going up a little bit. I’m not a fool though,” Engels said.

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