The cost of high prices
April 1, 2008 By Patrick Hyland
This winter’s rampaging propane prices spared no marketers from lost customers, crimped cash flow and mangled margins.
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This winter’s rampaging propane prices spared no marketers from lost customers, crimped cash flow and mangled margins.
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The American Petroleum Institute says total domestic propane sales for combined residential, commercial, engine, farm and industrial uses in 2006 fell for the fourth consecutive year.
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The propane industry’s four-year push to tap into the lucrative indoor cabinet heater market came to a screeching halt when the National Propane Gas Association’s (NPGA) board of directors on Feb. 12 voted 88-1 to suspend any further expenditure of resources to move the contentious issue forward.
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With the price of oil topping $100 per barrel amid a sputtering overall economy, propane marketers and customers alike spent much of the 2007-08 winter heating season struggling to cover their costs. And while some regions saw record-setting snowfalls, bitterly cold temperatures, crippling ice storms and widespread power outages, other parts of the country experienced way too much warmth to pump appropriate amounts of propane.
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Well-designed marketing plans, orchestrated pitches to promote budget plan enrollment and established collection procedures for when customers fall behind are being touted as key solutions for propane retailers faced with payment shortfalls.
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Every day, Holly Linden contends with an increasing number of customers who cannot afford to pay their propane bill.
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The rising cost of propane, coupled with limited federal home-heating assistance for low-income families, is not only putting the squeeze on customers but retailers as well.
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As owners and operators of mostly small-to-medium-size businesses, we tend to focus first on matters that are specific to our marketing footprint. Because our customer base is local, we have an immediate vested interest in local affairs. For our own self-interest, we become actively engaged in organizations like local fire protection or city, county and township government agencies.
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Managing risk requires commitment, focus and an effort to balance agendas that seem in conflict. The propane industry is not immune to conflicting agendas.
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There is a legal concept known as res ipsa loquitur that allows a jury to infer that an accident was caused by the negligence of a party without actual proof of that negligence.
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