News Column

Mo. Senate seeks federal propane probe

February 3, 2014

By Sue Sterling, The Daily Star-Journal, Warrensburg, Mo.

Feb. 03 -- WARRENSBURG -- A resolution filed by the Missouri Senate last week asks the U.S. Justice Department to investigate the "massive jump" in propane prices and the shortage. Attorney General Chris Koster also launched an investigation into the causes of the propane spike. U.S. Sen. Claire McCaskill asked for an investigation by the Commodity Futures Trade Commission . Sen. David Pearce , R- Warrensburg , said the shortage is partially the result of corn drying in the fall that used larger than normal amounts of propane, combined with the cold temperatures this winter. "But there might be a third reason, as well -- price gouging by major producers," Pearce said. "It looks like some companies are possibly lining their pockets with the hard-earned dollars of American families and businesses. ... Missourians deserve better than this kind of financial abuse." He said propane "hovered" around $2 per gallon five weeks ago. Last week, he said, "One could practically watch prices rise on an hourly basis" with prices nearing $5 per gallon by the end of the week. "That means that the average 200-gallon propane tank went from approximately $400 to $1,000 to fill," Pearce said. Soaring prices force families on strict budgets to choose whether to have a warm home, food on the table or paying other bills, he said. The U.S. Energy Information Administration reports propane exports increased by 219,000 barrels per day between October 2012 and October 2013 , from 189,000 to 408,000 barrels, with barrels containing more than 42 gallons. "It should have been clear to industry leaders producing such high volumes that the United States had increased its demand on a product we produce right at home," Pearce said. The resolution cites the closure of the Cochin pipeline from Alberta, Canada , in December, the increase in exports, "the drastic increase in price" and the price differences among propane storage facilities as causing "inaccessibility of propane to the citizens of Missouri ." McCaskill requested the Commodity Futures Trading Commission to investigate the spike in propane prices to determine whether normal market forces are to blame or "if opportunistic trading and price manipulation are at play." The CFTC and the U.S. Justice Department investigated complaints about price manipulation by BP Products North America Inc. , in 2004, that caused propane prices to increase to more than 90 cents per gallon "a price that would not otherwise have been reached under the normal pressures of supply and demand," and attempted price manipulation in 2003. The complaint states BP employees, "with the knowledge, advice and consent of senior management," engaged in speculative trading that cornered the February 2004 propane market by withholding propane from the market to drive up the price. The investigation found that BP manipulated the market, resulting in BP paying more than $303 million in civil and criminal sanctions, including $53 million to a restitution fund for victims and a $100 million criminal penalty. ___ (c)2014 The Daily Star-Journal (Warrensburg, Mo.) Visit The Daily Star-Journal (Warrensburg, Mo.) at Distributed by MCT Information Services

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Source: Daily Star-Journal (Warrensburg, MO)

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