Seeking Alpha

Michigan subpoenas Ferrellgas in probe of propane price hikes

  • Michigan's attorney general is seeking civil subpoenas against propane company Ferrellgas Partners (FGP) and its Best Propane affiliate in an investigation into customer complaints about price hikes.
  • The AG's office says it has received 65 complaints about FGP and Best Propane, including allegations of excessive propane pricing and misrepresenting the price to consumers.
  • The probe comes as many of the ~800K state residents heating their homes with propane have struggled to find the fuel, which is more costly than last fall, amid one of the coldest winters on record.
Comments (10)
  • TGC004
    , contributor
    Comments (447) | Send Message
     
    One of the coldest winters in recent years and short supply of propane, those complaining should get a basic education in the law of supply and demand.
    20 Mar 2014, 10:07 AM Reply Like
  • annimhere
    , contributor
    Comments (66) | Send Message
     
    Law of supply and demand does not compute when you call a propane supplier and they quote you a price, but, after filling your tank they bill you at a higher price. Or the supplier who won't give you a price at all before they come out to fill your tank, but will only give the price while standing with the nozzle at your tank. Gotcha. What do you do? Tell them to take it back? No. You got no heat. Its -10 and you have a family. Prices were rising at a doubling rate with the excuse of dwindling supply, but interestingly, no suppliers were ever out of the fuel.
    20 Mar 2014, 10:40 AM Reply Like
  • WmHilger1
    , contributor
    Comments (1273) | Send Message
     
    Would you have preferred that the company NOT pay its supplier the increased price for the propane, thus having none to deliver, and consequently NONE for you? Get real, increased prices to the propane delivery company mean increased prices for all users!

     

    Sorry, life is not fair! Real needs require unexpected problems.
    20 Mar 2014, 12:25 PM Reply Like
  • annimhere
    , contributor
    Comments (66) | Send Message
     
    You are funny. I bet if you were shopping in any store and you grabbed an item off the shelf that, say, was price marked 2.69, and when you got to the cash register it was now 4.09. You asked why. You were told the supplier just raised the price so now you pay more. Funny. You say ok, I don't want you to run out of this item so I'll gladly pay more. Its called price gouging and its illegal. That's why gas stations all go UP together. They don't want to be sued for price gouging.
    21 Mar 2014, 11:33 AM Reply Like
  • WmHilger1
    , contributor
    Comments (1273) | Send Message
     
    Not a very good hypothetical situation. If a store has an item on the shelf marked at a certain price, I think it is legally bound to charge that amount for it, IF you notice it in time and complain about it. In fact, in my experiences, it will sometimes even give you the item free if there is a discrepancy. It wants to know about the discrepancy and change either the shelf price or the register price ASAP so as to be trusted by all of its customers for their repeat business.

     

    As to gas stations, I have frequently seen different prices all over town. Sometimes even within a few blocks of each other. Just last week, I saw gas prices all the way from $3.29 to $3.54 on the same day. And, I know of at least 2 stations near me who consistently charge 2 to 5 cents per gallon more than nearly everyone else in town. I don't know how they stay in business. Either they have extremely wonderful service or very faithful customers. OR, they make their money on customers who are trading there in something other than only gasoline (you think so? Nah, the city wouldn't pemit that would they (duh)!
    21 Mar 2014, 04:42 PM Reply Like
  • DividendInvestorLA
    , contributor
    Comments (3602) | Send Message
     
    Actually, that would not be price gouging, it would be an infraction to the law (or ordinance) governing price labeling - at least in Los Angeles.

     

    Those types of things actually do happen occasionally, but they're not usually used by an ambitious AG to pretend he is 'protecting the population' from bad market conditions.
    23 Mar 2014, 01:55 AM Reply Like
  • tennvol_30736
    , contributor
    Comments (425) | Send Message
     
    The price of propane is tied to natural gas, which has doubled. Delivery of propane to a residence is costly, considering mileage, truck and hazmat driver, not to mention number of gallons refilled, along with distance travelled, can have a significant impact on price.
    20 Mar 2014, 10:56 AM Reply Like
  • DividendInvestorLA
    , contributor
    Comments (3602) | Send Message
     
    Frankly it looks to me like yet another Attorney General who sees him/herself as Governor or Senator and is trying to find an unpopular business to attack (those darn gas dealers - raising their prices how dare they?!!)

     

    There may have been bad practice (wasn't there) but when I read "allegations of excessive pricing", it just looks like pandering to the economically illiterate.

     

    Back to the company, this looks like it's a good opportunity to pick more, if you haven't already, as it just had a great quarter.
    20 Mar 2014, 01:49 PM Reply Like
  • regularguy
    , contributor
    Comments (3) | Send Message
     
    Just another ambitious wannabe attorney general. Of course people are complaining, Propane prices were extremely high this winter, since most natgas pipelines got constrained and there was no more natgas available - so people switched to propane for heating.
    FGP is simply passing on the high prices, they are just a retailer.
    You don't have to believe me, take a look at the chart here : http://bit.ly/1eqPH09
    20 Mar 2014, 03:16 PM Reply Like
  • tennvol_30736
    , contributor
    Comments (425) | Send Message
     
    Lawsuits are a frequent launching pad for those with political ambition and it is likely the case here. I see nothing in FGP's financials concerning profit margins that were extraordinary last quarter. Hence, I don't think the lawsuit inquiry has any credibility.Individual circumstances as to location, gallons sold, etc, are key determinants in price but also cost to distributors that only appear to be abusive but that is on the surface and doesn't reflect cost realities.
    21 Mar 2014, 10:17 AM Reply Like
DJIA (DIA) S&P 500 (SPY)
ETF Hub
ETF Screener: Search and filter by asset class, strategy, theme, performance, yield, and much more
ETF Performance: View ETF performance across key asset classes and investing themes
ETF Investing Guide: Learn how to build and manage a well-diversified, low cost ETF portfolio
ETF Selector: An explanation of how to select and use ETFs