Attorney General Addresses Propane Prices

LITTLE ROCK – Propane prices have risen dramatically in recent weeks, causing concern among Arkansas consumers who rely on the liquefied gas to heat their homes.

Many rural Arkansans use propane as a heating source, and they are being hit especially hard this year because of colder-than-normal temperatures. The State’s poultry and livestock industries – largely dependent on propane for heat – are also adversely impacted.

The Attorney General’s Office has received dozens of calls about the price surge.

Attorney General Dustin McDaniel issued this consumer alert today to inform Arkansans about the cause of the spike in prices and to offer advice to those who are affected.

“I share the concerns about the high cost of propane, and I hope that these prices are only an anomaly because of the extremely cold temperatures and supply shortages. The retail price of propane is based largely on supply and demand, just like any free-market commodity,” McDaniel said. “However, we will continue to monitor propane prices for possible price gouging and look for other ways to assist consumers.”

According to the National Propane Gas Association, a number of factors have led to a scarcity of available propane and delays in making deliveries to customers in some areas. Those factors include pipeline disruptions in the Midwest and an increase of U.S. propane exports. More significantly, demand has soared because of the cold weather across the country.

Last week, Gov. Mike Beebe declared a state of emergency in Arkansas because of the propane shortage. During the state of emergency, the state’s price gouging law is in effect. That law prohibits businesses from increasing prices more than 10 percent unless the increased price is directly related to costs imposed by a supplier or because of higher labor and materials costs.

If propane retailers or distributors reach agreements with competitors on prices, that is price fixing. Federal and state antitrust laws prohibit fixing of prices. Any consumers with direct knowledge of price fixing of any commodity, including propane, should contact the Attorney General’s Consumer Protection Division.

Meanwhile, McDaniel encouraged consumers affected by high propane costs to:

• Conserve propane by lowering the thermostat, cutting down on hot water usage and limiting cooking times.
• Consider using alternative heating sources, such as fireplaces or electric space heaters, to reduce propane costs.
• Own propane tanks rather than rent them. Homeowners who own their tanks can shop around for the best prices, while those who rent a tank from a propane company are typically prohibited from buying propane from any other provider.
• Think about signing long-term contracts in order to lock in a specific price for propane over a set period.

The Consumer Protection Division can be reached at (800) 482-8982 or on the Internet at www.GotYourBackArkansas.org