To Our Valued Customers,
The past few weeks, you likely have heard news about propane shortages and rising prices across the nation. Unfortunately, CoEnergy cannot avoid the impacts of these trends. I want to share information with you as our customers to help you understand why this is happening and how CoEnergy is working to ease the difficulties.
We’ve been in business for many years with deep roots in the communities we serve. We have secure storage capacity and we maintain strong relationships with multiple propane suppliers. We do everything in our power to ensure we can deliver ample and fair-priced propane to our customers. I ask your patience and understanding that during this difficult period it sometimes may take longer to reach us by phone. Our cold weather is driving up the rate of consumption which means a sharp increase in the number of delivery requests. We also are having a high number of calls to discuss price concerns. I want you to know we are fielding your calls as quickly and efficiently as possible.
There is no getting around it; prices are higher than you expected them to be this winter. The primary reason is high demand. It has reached record levels due to increased agricultural need in the Midwest, which drove up prices in November, followed by the onset of a bitterly cold winter in many parts of the country, including Oregon’s recent exposure to sub-zero temperatures in areas. By early January national propane supplies had fallen 23 million barrels below the same time a year ago. Over the next month, that shortfall grew another million barrels. Transportation issues have made this situation even worse. A major national pipeline stopped transporting propane this season and rail car and truck transport is in short supply. This one-two punch has hit some areas exceptionally hard, causing prices to rise on an almost daily basis.
One might assume this creates increased profits for CoEnergy. This could not be further from the truth. Our margins are not increasing; rather our price increases are being driven solely by an increase in our wholesale costs. When the cost of a commodity like propane goes up, the increase unavoidably increases the retail price. The sooner the prices drop, the happier CoEnergy and you will be.
In order to balance weather-driven high demand with tight supplies, we must adjust our approach to deliveries. We normally like to fill your tank to full capacity, but to make sure everyone has propane until this situation eases we may opt for partial fills in some circumstances. CoEnergy does have programs to help keep your payments manageable. While many of these plans start after winter is over, they can provide significant relief going forward.
CoEnergy is working with our local propane association and the state of Oregon to stabilize local markets. We hope these actions will soon produce benefits. The long-term trend for propane remains very positive. Huge increases in domestic oil and gas supplies have improved the fundamentals of the propane market. Spikes like we are experiencing today are usually temporary events. Once balance returns, we expect better news for our customers.
CoEnergy is committed to working with you to keep your propane bills manageable and fair. Please contact us if you need more information. While it may take a bit longer to reach us right now, I assure you we are dedicated to providing the best customer service possible. Thank you for your understanding.
Randy W. Camp