PreBuy is the best deal for Propane Customers
Propane retailers are coming off a record-breaking winter cold snap and volatile prices, where propane prices topped $4.00 a gallon in the spring of 2021 in Southwest Missouri.
Many propane customers, who did not plan for the crisis, and didn’t have the funds to purchase at the high prices, were left scrambling. “They were calling multiple retailers just to get a minimum delivery. Some companies were extremely generous and delivered gas on credit so their homes would not run out. As the summer progressed, many of these customers did not pay their bill, leaving the retailer out in the cold,” reports David Sanford, managing partner with MS Propane.
Customers who contracted their gas the prior summer did not suffer from the price volatility. Let’s go back to the previous summer to see how they fared.
Plan ahead to avoid the crisis
Starting in June 2020, retail customers were offered PreBuy gallons, usually the number of gallons used in the prior year, at a fixed price per gallon. (A minimum number of gallons are required, and the gas must be used by the end of the winter.) The price per gallon for the program last year was under $1.60 for the retailers in Southwest Missouri.
Customers who paid in full at the time of purchase received the best price. But those on a tighter budget had the ability to pay their prebuy gallons in payments. A “four pay”, which is an installment plan paid in 4 payments during the summer, allows for gas to be delivered beginning in the fall. Monthly payments were also available, but gas would not be delivered unless there was enough on the account for a fill. These programs each had a different pricing structure. They still did extremely well when prices were increasing all winter, reaching highs of $4.00 a gallon in February.
Pay a dollar to save a nickel
While there is no guarantee that the prices will always be higher than the summer prebuy offer, it has fared well 7 out of 10 years, on average. For most customers, that is good enough for them. It takes the gamble out of the equation. Those years that it goes to $4-5 a gallon, it makes up for the few years it may go down.
When customers are calling around in the winter trying to save a penny or two per gallon, PreBuy customers were busy with other things in their lives.
What is the catch?
Purchasing your gas in advance has one catch. There is limited availability since the retailers must purchase the prebuy gallons and arrange for the storage. There are penalties for any gas left. Prebuy is offered first to customers before any extra is available to the public. So, if you can get in on the PreBuy program, you can rest assured that you are set up for delivery and will be a priority customer when the winter chill arrives.
