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The Propane industry (25 Posts)
The Propane industryis getting like the natural gas industry, Big companies buying up all the smaller ones which is sort of a monopoly which is no longer against the law by the way.
Inergy has agreed to sell its retail propane business to Suburban Propane Partners for $1.8 billion, Suburban Propane announced this week. The deal would increase Suburban Propane's market reach and make it among the country's top propane retailers, along with AmeriGas and Ferrellgas Partners. "Proceeds from the sale of the retail propane business will substantially improve Inergy's balance sheet, we believe," industry analysts said. [u][color=#0000ff]Reuters[/color][/u] (4/26)
Decreased competitionIn my area the two big propane "players" are Suburban and Amerigas...but the best prices are from the small independent propane companies. I would hate to see them get swallowed up by the big guys.
Wet Natural Gas and CompetitionRemember that the fracking industry is prospering on privately owned land, not our government owned real estate. I suspect if the citizens of the United States allowed more public land to be mined or drilled, the price of the product would come down. It's funny you should complain about competition. What if the citizens of the US opened vast amounts of public land to fracking, wouldn't the private land owners complain? Who would get all of that "excessive" profit? Are private land owners keeping the Citizens of the US from drilling on public land? If the current adminstration really wants a piece of the pie, it would open that public land. It could be the current administration is causing the consolidation of the industry too. We know the more supply of a good or service in any market, the more flexibility consumers have in purchasing the good or service = lower prices and stability. But if it isn't mentioned that an administration holds great sway in leasing of public land, it is easy to condemn private industry for "excessive" profit. Imagine if more public land was tapped, prices really could go down and the government deficit, that buried issue, might really shrink!This post was edited by an admin on April 27, 2012 1:51 PM.
Let me get somethingstraight here. The worst thing that ever happened to the natural gas industry was de-regulation and unbundling.
Most gas utilities of the past cared about their customers and their employees. I know I was working for one of them which was a wonderful place to work and gave great service to their customers some for free and still made money and paid dividends to their stockholders for over 100 years straight. The ability of local utility commissions to oversee the utility was a positive local policing of the industry.
We now have large utilities getting larger and they no longer give service and employees are just numbers. We have lost something in that once proud industry.
The Propane industry which I also have a long standing involvement with is going the same way. Small Mom and Pop businesses struggling to compete with the big guys. The big guys buying up in particular the middle size companies which offer a good customer baser and have liquidity and assets which help the big guy make more profit. The Propane industry since 1988 has found itself coming together to develop an ability to advertise the industry along with providing education. I hope they do not go the way of the Natural gas Industry.
By the way those drilling or fracking for gas are not the local public utilities they are attached to big oil if you track back to the parent company sponsoring the drilling.
Getting Straight - Government RegulationsDo you agree that government regulations increase cost of doing business? That could account for companies finding economies of scale by being larger. Has the open market been bad for you and me? The small companies paved the way for todays low prices for natural gas. Like the car industry, the big companies survive because government caused them to produce cars that are evermore complex. Granted that the cars today are better than yesterday. You and I benefit from some regulation, but it causes prices to increase. Do think that is a truthful statement? How about this thing called the internet that you and I correspond by? Do you think Ma Bell would be doing this if it weren't broken up? From what I heard Ma Bell scoffed at the internet. It was the youth dropouts like Bill Gates that changed things. Aren't you and I better off because you can buy things over the internet and not supporting Sears? Poor Sears.
How about that Poor government sponsored monopoly or public utility company! Economics 101 states that monopolies are wasteful. That is, since there is no competition the company can add employees. What a deal to some big executive! Why would you need to hire so many people when it can be done for less by a more hungry group of folks? You benefited. Take it for what you had and don't complain. But you still need to worry about your pension. Perhaps a bigger company will make more money and buy your pension to keep you warm at night. Be well.This post was edited by an admin on April 27, 2012 3:12 PM.
Government oil and gas leasesAccording to the Bureau of Land Management (BLM) in 2011 there were over 5,000
Federal oil and gas leases covering 4.9 million acres of Federal land. That is just in
the state of Colorado. A lot of those wells have ben drilled , fracked , and capped.
Why would an oil company go to all the expense to put a well into production and then cap it?bob
Why drill and cap?"Why would an oil company go to all the expense to put a well into production and then cap it? "
Drill while you still can before a fracking well contaminates a major water source.
Cap to wait until the prices of the gas are adjusted up enough to make a bigger profit.
A boiler FireI was a victim of unbundling being over 50 years old (53 to be exact) it was 1994 I was making over $50,000 a year with great benefits. Myself and 29 others same age same salary range with same benefits DOWNSIZED on what we all call "Black Tuesday" armed guards escorted employees with over 25 years experience out the door. I was home recuperating from a heart attack when all that happened, that will surely help your recovery. That DOWNSIZING costs me $20,000 every year in retirement benefits. Thank God I made friends in the industry as Honeywell hired me as a sub contractor and I went on the road doing training for them from 1994 until 1999. Technically I have not received a paycheck from a company since 1994 and the Lord has provided for me every day.
I work everyday with the same philosophy I learned in the old gas industry to love the people and take good care of them and be a helper not a hindrance.
This is still the greatest country in the world one founded on certain principles that will prevail in spite of what governments do. I must be optimistic for the future or I will perish.
TimI have the utmost respect for your knowledge and am sorry you had the experience you did. I understand if you feel the rules changed in the middle of the game,but in reality it was foolish for anyone to trust that loyalty and hard work would be reciprocated by lifetime employment and a pension.
it was foolish for anyone to trust that loyalty and hard work would be reciprocated by lifetime employment and a pension.Actually, it was not foolish. Those with long memories will recall when it was perfectly possible to rely on that kind of behavior from (some) corporations. My grandfather worked for Bell Telephone Laboratories all through the depression and until about 1975 or so. During the depression they did not lay anyone off. They cut the work week to three days for three days pay, but that was better than firing the people. And three day's pay was OK during the depression where your purchasing power competed with the totally unemployed. As a consequence, there was great loyalty from the employees that reciprocated the loyalty from the employers.
Somewhere around the mid 1970s, and getting worse with time, the management of AT&T (owners of Bell Labs) got overrun by bean counters who had no understanding of the company, no understanding of how a research establishment that took 100 years to build, and no civility, destroyed the company in less than 20 years, never to be rebuilt. I doubt Bell Labs and AT&T were the only company that did this.
When I lived in Buffalo, N.Y., from 1942 until about 1965, there was a similar loyalty between Bethlehem Steel, Republic Steel, Hanna Furnace Co., E.I. Dupont, and Bell Aircraft Corporation. And in the same time interval, they all disappeared from the area.
It was not foolish. The problem was the human beings that started these companies were replaced by business administration types who are morally only one step above lawyers and politicians, and that spoiled everything.
Not Disagreeing JDB"It was not foolish. The problem was the human beings that started these companies were replaced by business administration types who are morally only one step above lawyers and politicians, and that spoiled everything."
And I realize that we are separated by more than a few years but here is where we are? Now what? Lawyers, insurance companies and others are in charge of things we wish they weren't, what can we do? In some capacity we've all been turned into "bean counters", I don't like that handle, but I run a household too. Now what?
Now what?I do not know what now. When I think about it, I get extremely depressed. The only way I know of to deal with it is denial, and any good psychologist will tell you that is a non-productive approach. I think our current government-economic system is beyond repair. If I had lived in the 1920s or 1930s, I might have suggested replacing it all with Socialism or Communism, but as they were practiced in other countries, that has not normally worked well either.
I think the real problem is that there are way too many people in the world to permit proper government. Democracy worked in Athens for a little while. There were about 2000 citizens and 10,000 slaves. The citizens knew each other fairly well. Do you know your elected representatives very well? Do they really represent you? Even if democracy would work with 2000 citizens, I do not think it could possibly work with 250 million. The nearest I know of might be Switzerland. We would have to get the world population down to 1 or 2 billion people (7 billion now and increasing rapidly). There seems to be no moral way of reducing the population rapidly enough, so barring serious wars or terrible epidemics, we will go by starvation and lack of water and sanitation. See why I get depressed?
Robert it was typicalin the 1960's when I left the US Navy after nine years to look for a job with security. A utility was the answer. When I walked away from the Navy I had five job offers, the telephone company, IBM, Raytheon, selling jewlery to military personnel and the gas company. I chose the gas company because my experience was that relatives of mine who worked for the utilities back in Pennsylvania had lifetime good paying jobs. I have never regretted my decision, the deal is you can't change what people decide to do we are all some times victims. The answer is to get up dust yourself off and start the re-inventing process. I have tried to do that and hopefully have inspired a few folks along the way.
I really do not like what I am seeing happen in not only the USA but the world!
the InternetWas a product of DARPA and the National Science Foundation. Ma Bell sold point to point lines and collected the rent from those agencies. 1995 began a relentless privatization of what was once a public commons - frequently by converting taxpayer-funded infrastructure to private property - without bothering to reimburse the taxpayers.
Cool-Aide:I think that you are a disciple of Jim Jones and Milton Friedman, and drank too much Cool-Aid.
Like a later poster said about drilling, fracking and capping in Colorado, and the leasing of public land in Colorado and the rest of the country has exploded under President Obama and his administration. But you won't hear that on Faux Noise.
The reason the Fracked Wells are capped, is that the wells are owned by energy consortium's and are waiting for the time when the Wall Street Banksters and their wholly owned Crime Family Subsidiary finishes consolidating the market so they can manipulate it to their advantage. NOT to our advantage.
I know that it is hard for you to listen to an old fart like Tim Mc or myself, but there was a time that we, who learned our trades well, were employed by the best who demanded the best from their quality employees. With the rise of your Presidential Candidate, Bishop Mittens R, The consolidation of the small businesses into the huge, went on steroids. The last thing they wanted was employees.
So I ask you, Mr, 1%'er. who will buy your products when we are all working for Chinese labor, and can't buy gas for our trucks, and Wal-Mart food is too expensive?
We already are a net exporter of petroleum products, gathered in this country, to be sent on the world market. We were supposed to see all kinds of savings if we just "Drill Baby Drill". We have been Drill Baby Drill for the last three years. How come we haven't seen any savings in gasoline and fuel supplies?
Institutionalized Corporate Greed.
"The worst thing that ever happened to the natural gas industry was de-regulation..."Tim, that's a correct statement, but applied much too narrowly. The worst thing that ever happened to this country was deregulation in its many forms.
Regulation seeks to place citizens' interests above corporate interests. Despite the most recent in a string of absurd Supreme Court decision (Citizens United), corporations are not people. They are legal constructs granted certain advantages by a government which used to require appropriate corporate behaviors in return. Unfortunately, for the last three decades, those requirements have been incrementally dismantled.
The people most affected by deregulation, average citizens, haven't a clue that they're complicit in its progression. Seeing only the immediate, short-term benefit of apparently lower prices, they embrace a brief ability to get "more" of whatever product/service. Many flock to big box stores and purchase imported absolute garbage for pennies. They can't grasp the decimation of domestic jobs that results from this unregulated, but unfair, trade. Until it impacts them.
Extremely significant deregulation took place with the Telecommunications Act of 1996. No longer were broadcasters required to serve the public interest. No longer was licensing based on proof of doing so. No longer were there reasonable limits on number of outlets in a market. No longer did "news" actually need to be real news. Now the corporate masters completely controlled what was electromagnetic spectrum owned by all US citizens, with no compensation to the public required. For the past sixteen years, oligarchs have made good use of their propaganda system.
A Boiler File made reference to "the current administration" and its record on public land drilling. Let's be clear -- both parties have been complicit in deregulating the industries that, thanks to now nonexistant campaign financing regulations, own them, especially oil and gas industries. That Telecommunications Act was signed by Clinton. However, neither party is willing to make appropriate decisions because a public spoiled by "more for less" would turn them out of office for doing so. icesailor asked ask who will buy Mr. 1%'er's products when everyone is working for miniscule wages. Executives of entities in the government-corporate complex will happily sell to wherever on the planet a market for those products exists; they don't care if customers are in the US or elsewhere. Identity and allegiance has transitioned from country to corporation. Indeed, they "own" this country, which is now of the multinational corporations, by the multinational corporations and for the multinational corporations.
The world's population greatly exceeds its carrying capacity. Humans haven't demonstrated intelligence superior to other species, failing to recognize this fact and not limiting our reproduction rate. Therefore, the only thing that can mitigate excessive energy consumption is higher commodity prices. Gasoline at $5 per gallon should have been implemented by taxing to that level at least fifteen years ago. Government, owned by big oil, obviously wouldn't go there. Now, with all our dollars pushing demand in China, the market has finally elevated it to more than $4 per gallon. Better late than never. Prices of other energy sources, while not yet tracking directly, will climb proportionally as soon as infrastructure is put into place that enables our NG to reach China et al.
Jean-David Beyer, denial and/or depression will not help you. My approach is to ignore the mess and concentrate on other things of interest to the maximum extent possible, while still remaining sufficiently engaged to cast informed ballots. The situation will eventually rectify itself, just as it did the last time we faced similar circumstances nearly 90 years ago. Citizens United, like Plessy v. Ferguson, will eventually be overturned. But perhaps not within my lifetime. :-)
It's a market"Imagine if more public land was tapped, prices really could go down and the government deficit, that buried issue, might really shrink!"
As ME says, it depends. If the private companies in nation A pump more product to try to lower prices because they want to be nice, nations B,C,D,E,F etc will slow pumping to maintain prices. See drill and cap question. If the US actually owned the land, the mining rights AND did the drilling and pumping etc and did not have a for profit operation to maintain, perhaps the product would be sold for a lesser price. Or because the US deficit is so large the government might prefer to keep prices high to encourage conservation and pay down the deficit which will still be growing.
Getting more dollars per unit of product is the driving factor, why would I want to drill more and get less dollars? You will buy and have been buying my product regardless of the price. You do this even while I have a surplus and export it because I can get more dollars than just holding it in tanks waiting for you to buy more. Money is made from the product, not the fee I have to pay to drill it out of your land. The fee is a minor business expense.
LNG tankers are being built to export the NG as well. Here in Baltimore we are getting an export terminal. Bet the price of NG goes up as the US producers develop their foreign markets with very long term contracts.
This post was edited by an admin on April 27, 2012 5:48 PM.
More Cool-Aid:Maine, what flavor is that Cool Aid?
A wealthy Oil Man I know says that the way to stop the speculation is to make the speculators pay and take possession of the product. Your pals, The Speculators, get wealthy and never even pay for the instrument of their speculation. That we pay for, and they pay far less on their profits (that we subsidize) than we ddo on our/my profits. AND we let them drill for nothijng on public lands, owned by we US. We give them "Tax Credits". So they can make more money and charge us more money? So a bunch of over-paid lazies can sit around and hire illegals to mow their lawns and do their landscaping?
When the rules for short selling changed so that you didn't have to put up as much money when buying short, the prices went through the roof. Every barrel of oil in a tanker that leaves a terminal has its product sold over and over before it gets to a port and no one ever has any real skin in the game. The Futures market was for those who needed the product to buy "futures" for when they needed it. Now, the futures are the exclusive property of the wall Street Crime Family. Small dealers can't play in the game. All energy speculation is now run under the Enron model and we should all know how well that went. Then another one of your hero's, Sen Phil Gramm and his wife were instrumental in removing an act that helped solve what got us into the 1930's depression, Glass-Stegall. When Glass Stegall was removed, it opened up the market for the Wall Street Banksters to crash the worlds economy with fraud.
How's your 401K doing after 2005?
I flew up from Florida a few years ago. We routed out over the Atlantic. All I say were oil tankers, waiting to be unloaded. Or waiting for the price to get pushed up by the Banksters so they could make more money.
Ask anyone in the energy business how things are. They suck.
financial "modernization"Frontline (one of the last bastions of hardcore investigative journalism in the MSM) just dug into this deeply http://www.pbs.org/wgbh/pages/frontline/money-power-wall-street/
All well and good, butDomestic natural gas supplies are off the charts right now and prices are at historic lows, especially when you look at the cost per therm compared with oil. As I understand it, so much profit is being made off the condensate and the liquids that they don't actually care much about the price of the NG. How would more drilling help this situation?
Sad ChangesI worked for a manufacturer that had 1200 employees. The owner use to walk the floor and greet people, by name. If he hadn't spoken with you in 6 months, and the last conversation you had with him was about your kid having pendicitis, he'd ask how the child was. He would not let management of the company hire anyone for a "Personnel" department. He said," The only reason you need a personell dept. is if you intend to screw the people". Once they reached 1200 employees they did hire someone, but he was told to stay home when the owner was at the factory.
The owner finally died, and the business was taken over by his children. They began the "slow gutting" of the company. Taking benefit after benefit from the people whose names they didn't know. NAFTA and other trade agreements put the final nail in the coffin, and when they closed the plant to move production to China and Mexico, the largest department, was Human Resources, or Personnel.
It was not uncommonfor folks in my fathers generation, depression era/wwII and after to get a job and keep it. Today, you have a kid talk to someone who worked at the same place for 40 yrs and you can see it in their eyes. "What's is wrong with this guy staying at the same place for 40 yrs?" There was a bit of social compact with employees, the good ones at least. Along come the 70's and shareholder value trumped all. Employees cost money. They are an expense to be minimized and production must grow. That is correct, but a bit heartless. That is why the kid feels as he does. Why should he care about a company that will throw him off without so much as a fare thee well. I think Bain Capital is a good example.
I met Tim when he was still with the gas company. He is correct, it was an excellent outfit providing great service, safety, etc. I remember when Tim told me he was "no longer with the gas company". We both knew what was ahead. To Tim's credit he made the best of it. Many never did. This deregulation and getting utilities out of installing equipment was good for the trades. Sometimes it was good for the consumer, sometimes not. That depended, as always, on who was handling the wrenches.
We are capitalists. We are hungry. We are in a competitive world and there are, to my mind anyway, no "American" companies. The big ones are all mulit-national in a world market and have zero concern for anyone or any nation beyond their "market value", period! You only have to look at the corporate taxes paid to get that sense.
As to the lp industry. I built my business in the early 90's largely on the independent lp industry. Tim's view on the consolidation is correct, but once these guys become so large it creates fertile ground for the new crop of independents to start, grow and flourish. The big get big, big, big and cannot be concerned for their customers. Some guy working for those companies gets pissed off and decides he can do it better. Smaller, but better! The consumer imho, craves the attention and care they cannot get from the big guys. Our industry is still a belly to belly business. You have to meet people and build relationships in order to build your business. There is always opportunity!
The rest of my storySix months after "Black Tuesday" the six vice presidents at that company were also DOWNSIZED, in fact one of them was my direct boss who had called me six months earlier to tell me I no longer had a job. Such irony was typical in the 90's when all that we are now suffering was taking place in the economic world. The 90's was the time of downsizing. Interesting the CEO at the time of my job loss and those six VP's was due for retirement about the time all this took place. He walked away from the company with approximately 11 million dollars. When the bottom line looks good the stockholders are happy and the rewards go to those on the top.
Just a side observation on my part here locally is TACO, I marvel at John White as a company owner who stays so close to his employees He is a throw back to better times in industry. I have walked the floors of TACO and all his employees tend to love John. We need more corporate executives like him.
Deregulation,the flip sidePrior to unbundling,the utility built the cost of service into the price of the gas. The people who needed no service subsidized those who did. Contractors couldn't do gas service as the utility provided it for "free". Of course the benevolent,bureaucratic utility did this service out of the goodness of their hearts and in the most cost effective,efficient manner available,LOL! I look at it as creative destruction,contractors now do this same work in a free market environment,the consumer can choose who they want and when and don't have to pay for the neighbors boiler repairs!
The utilities who did the service work were the only ones who could afford liability insurance to have their trained employees do the work. Very few wanted to do the work because of the lack of training. Most doing service and gas installs today, aren't properly covered by insurance, myself included. But the utilities had the best trained and equipped technicians. With When the leveraged buyouts of the 1980's and 90's decimated businesses to the profit of the likes of Bishop Mittens, anything that took away from the bottom line was to be dumped. Employees.
There are few today that can properly service gas equipment. Those that can, don't have enough time to do it. And the junk sold isn't worth fixing. There is a discussion, maybe it's this one about the consolidation of LP suppliers. I'm familiar with a company, started by an individual with a dream. He built it up to be quite an operation with tankers, a bulk storage facility, repair facility and did installs. He got old and sick. He sold it to a large national energy company. They would do anything to get rid of their service division. Their #1 service is commercial and residential gas service. And they have three very, very good service personnel and installers. But the company will not purchase any combustion analyzers for their employees. This is a company that the heating installers get to do their gas piping and setting up of their equipment.
Recently, I found a problem with a gas furnace at a customers house. I put my CA into the outside exhaust and read 450 PPM of CO. I had told the caretaker last December that it was 48 PPM and to get it looked at. He didn't. The gas supplier came out and replaced the "shotgun" burners that had the CI inserts totally rotted from salt air. I was getting ready to leave when he was done and proclaimed the unit completely fixed. I told him to wait so I could analyze it again. It now ran at 1500 PPM CO. The secondary HX was plugged. I could smell the exhaust from 100' away. I think that this company is now owned by a company that is in this latest monopolistic merger. I'll bet that under new leadership, these employees will be looking for a new job.
Another company just started up three years ago and is eating the lunch of the first company because they were screwing customers with a grossly unfair multi-layered price structure. Not giving senior citizens discounts and other such things. And their service department is improving. I call that predatory pricing.
The Sherman Anti-Trust Act is still in effect. It just isn't enforced. It needs to be enforced. How long would any of us stay in business if we walked away after an expensive install and didn't take care of it? I guess, more than I thought, judging from all the help we get and give here.