Over 100,000 gallons of buying power -- and growing.

Propane Club

1425 Black Champ Rd.

Waxahachie, TX  75167

 

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Propane Economics

Why "Keep-Full"  and "Credit Card on File" are good,

and gimmicks are bad

 


 

The research of this subject is why Ray started the Propane Club.  If you'll spend a few minutes reading it, it could -- like it did Ray -- save you thousands of dollars.  It is divided into two equally important sections, "Economics" and "Keep-Full."

 

 

Economics

 

Propane companies are in business to make money and they have it down to a science.  It's a very competitive business, as the winners can make a lot of money.  Propane companies aren't always known for having the best business practices, so be careful who you use.  We've seen multiple instances of what we considered to be deceptive practices.  We don't have those issues with our provider.

 

Just as gasoline rises during the summer driving season (or any other reason they can fabricate), propane has seasons, too.  As most consumer propane is consumed to heat homes, the bulk of consumption in our area is mid-December to mid-March.  During the summer months, very little is used, the wholesale price drops, and many companies buy as much as they can afford (or store) during that season.  This often gives them very cheap propane going into early fall, which they use to hook customers.  They'll offer great prices, but they're often limited to the first fill-up or even the first 100 gallons.  They try to get you to rent a tank, because then you can't buy propane from anyone else unless you swap tanks.

 

During the winter season, most propane companies are running at maximum capacity for their trucks and drivers, so they do several things to increase their profits:

  • They increase their profits.  If the wholesale price goes up $1.00, they may raise their retail price $2.00 (or more).  It's supply and demand, most do it, and they get away with it.  (If you're a Propane Club member, and have a lock-in, they cannot raise your price at all.  If you are on "cost-plus," they may only raise your price by how much their cost went up -- in this example, $1 instead of $2, saving you $1 per gallon.)
     

  • If they have the manpower, they may only partially fill your tank.  Most add delivery and hazmat fees, so the next week than can come do it to you again.  Your price-per-gallon increases considerably when you add fees, especially if they don't put many gallons in your tank at a time.   If for any reason they are running low on propane, they may do the same to increase their revenue even more and to get them past their shortage.  Or, they may do it to increase their profits. (Our supplier is not allowed to charge any additional fees.  This is one of the reasons we no longer use one of the suppliers we previously used.)
     

  • Many propane companies will fill anyone who owns their home and leave them a bill.  Bad debt is a cost of doing business, and that cost has to be passed on to those who pay their bills.  They don't care where they collect it, as long as they do.  Unless you believe in re-distribution of wealth, you'd probably prefer not to pay for other people's propane.  (Our providers require a credit card on file (or comparable arrangement) to get the Propane Club discount.  That way, we're paying for our propane, not someone else's.  If you would like to voluntarily contribute to the propane costs of those less fortunate, we can assist.)
     

  • If they are running at maximum capacity, they will typically not take-on new customers ("I only need 100 gallons" customers are left in the cold).  (Propane Club members are always priority, and our supplier has their own supply tank.  See more about this below.)
     

In all the scenarios above, the consumer loses.  And, perhaps freezes.

 

Most propane companies have a 100 gallon minimum.  Some people have 100 gallon tanks, which will only hold 80 gallons (tanks fill to 80% max).  If they have 5 gallons left, they can only get 75 gallons, but they'll get charged for 100 gallons, plus delivery and hazmat charges (usually about $11), by most companies.

 

At $3 per gallon, that's $311 for 75 gallons, which is $4.15 per gallon (a hidden increase of $1.15 per gallon).  Even 100 gallons at $3 per gallon, with delivery and hazmat fees of $11, is $3.11 per gallon (a hidden increase of 11 cents per gallon).

 

If you have a 100 gallon tank, our supplier, Poor Boys LP Gas, LLC, will generally charge only what they put in it, assuming it's almost empty when they come, even if you're not a Propane Club member.  Please contact them for more details.

 

Keep-Full and Keep-Warm

 

... the non-member pays $411 for 100 gallons, while the Propane Club member pays $81 less for 50% more.  This obviously makes no sense, but it happens almost every winter.  (example below)

The only reservation we hear about "keep-full" is because some say they can't afford to fill their tanks.  While we now offer "will-call," "Keep-full" is important for various reasons, including keeping you warm in the winter and saving you money.  It typically provides an additional 10 cent per gallon discount off the club rate, plus it qualifies you for their 24/7 service at no extra charge during winter months if they are negligent and let you run out.  The Jack Benny "I only need one gallon" approach is used by many, but it is NOT in your best interest.  Unfortunately, this is commonly the mentality of seniors and it is seniors who are most often the greatest victims.

 

First, let's look at not freezing.

 

Propane companies are going to take care of their own customers first, and our supplier gives priority to Propane Club members because of our buying power.  Several years ago, there was a prolonged ice storm in Texas -- it lasted about a week.

 

Most small companies buy their propane from a competitor.  So, when there's a shortage, they run out first.  Our provider has their own tanks, and they even sell to some of their competitors.  In a shortage, they're going to take care of their customers, not their competitors'.

 

Most propane comes to our area from the Houston area, and is delivered to the local dealers by transport trucks.  During our big ice storm, the DPS prohibited propane transport trucks from driving, due to the increased danger of having a wreck while transporting propane.  Local suppliers were limited to what they had on hand, so they took care of their regular customers.  "Shop around" and "I only need 100 gallons" customers were left in the cold.  Propane Club members had no trouble whatsoever.  The local delivery trucks were allowed to deliver, and, since our provider has their own storage tank, our members were taken care of.

 

Second, let's look at economics.

 

Let's look at some simple math.  If you have a 250 gallon tank, it will hold approximately 200 gallons.  20% (a little less in cold weather) must be left empty for expansion.  20% on a 250 gallon tank means you have 50 gallons left.  You need 150 gallons, but some want to order only 100 gallons at a time to save money (and maybe freeze if there's a shortage and companies refuse to deliver less than a full tank).

 

The 2012-2013 lock-in was $2.20.  As of November, 2012, we'd had only one minor cold front, but propane was already running $3 (retail) per gallon.  (In January, 2014, some were selling propane for $4.60/gallon.)  If a Propane Club member received 150 gallons, the cost was $2.20 per gallon, or $330.  If someone bought 100 gallons at the then current retail of $3 per gallon and had to pay $11 in fees, they paid $311, or $3.11 per gallon;  that's 91 cents per gallon more.  For an additional $19 dollars, the Propane Club member received 50 gallons more propane.  That's like paying 38 cents per gallon for the extra 50 gallons.  Why wouldn't someone want an extra 50 gallons for $19?

 

Let's assume the tank is almost empty and will hold 200 gallons.  The Propane Club member would have paid $440.  The non-club member would pay $611, an additional $171.

 

It gets worse.  Propane went to over $4 per gallon during the cold of winter.  The Propane Club member still paid $440, but the non member paid $811 -- an additional $371.

 

With the 150 gallon scenario above, but with retail at $4, the Propane Club member would still pay $330.  But, the "I only want 100 gallons" person would pay $411 retail.  That's right, the non-member pays $411 for 100 gallons, while the Propane Club member pays $81 less for 50% more.  This obviously makes no sense, but it happens almost every winter.

 

 

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Copyright 2007  and

  

Save on discount propane in all or portions of Dallas County, Ellis County, Hill County, Johnson County, and Tarrant County, including Abbott (76621),  Aledo (76008), Alma (75119), Alvarado (76009), Aquilla (76622), Avalon (76623), Axtell (76624), Bardwell (75101), Barry (75102),  Bellaire Park North (76132), Bellmead (76705), Ben Hur (76642), Benbrook (75100-76199), Blum (76627), Brandon (76628), Briar Oaks (76028), Burleson (76028, 76097), Bynum (76631), Carl's Corner (76670), Cayote, Cedar Hill (75104, 75106), Celina (75009), Chalk Mountain (76649), Cleburne (76031, 76033), Clifton (76634), Corsicana (75109, 75110, 75151), Cottonwood (75158), Covington (76636), Cross Timber (76028), Crowley (76036), Decordova, Edgecliff Village, Ennis (75119, 75120), Ferris (75125), Forreston, Fort Worth / Ft. Worth (southern), Frost (76641), Garrett (75119), Gholson (76705), Glen Rose (76043), Godley (76044), Granbury (76048, 76049), Grandview (76050), Hillsboro (76645), Hubbard (76648), Hulen Bend, Hulen Heights (76107), Hutchins (75141), Italy (76651), Itasca (76055), Joshua (76058), Keene (76059), Kopperl (76652), Lacy-Lakeview (76705), Lancaster (75134, 75146), Leroy (76654), Long Branch (75167), Malone (76660), Mansfield (76063), Maypearl (76064), Meadows West, Meridian (76665), Mertens (76666), Midlothian (76065), Milford (76670), Mira Vista, Morgan (76671), Mt. Calm (76673), Nemo (76070), Oak Leaf (75154), Ovilla (75154), Palmer (75152), Panther Heights, The Parks of Deer Creek (76140), Pecan Hill (75165), Pecan Plantation (76049), Penelope (76676), Poolville (75119), Rainbow, Red Oak (75154), Rendon (76140), Rio Vista (76093), Ross (76684), Rosser (76487), Scurry, Telico (75120), Venus (76084), Walnut Springs (76690), Waxahachie (75165, 75167), West (76691), Whitney (76692), Wilmer (75172), Wilmer-Hutchins, and vicinity.  Our provider is Poor Boys LP Gas, LLC.  We are no longer associated with HILCO Propane or Ferrellgas.  HILCO is a registered trademark of HILCO Electric Cooperative, Inc. and/or HILCO United Services.