Can NPGA still represent everyone?

March 1, 2007 By    

Recently, a headline on the inside business section pages of the Washington Post caught my eye. It read: “Accounting Firms Form Policy Group.” Having once worked for the American Institute of CPAs (AICPA), I stopped to read the story.

Daniel Myers
Daniel Myers

The story reported on the creation of a new organization, the Centre for Audit Quality, by the accounting industry’s biggest firms: KPMG, PriceWaterhouseCoopers, Deloitte Touche Tohmatsu and Ernst & Young. They had hired a former director of the office of legislative affairs at the Securities and Exchange Commission to be its director of operations.

The stated purpose of the organization is “to bring together the public company accounting profession with a focus on the issues that are in the public domain.” In other words, it will lobby at the SEC and on Capitol Hill on behalf of the four biggest accounting firms in America on the issues of auditor protection from lawsuits and how companies report financial information.

Now you might ask, why would that be of interest to the propane industry? Because it is indicative of what is happening in many lines of business today and what may be happening at the National Propane Gas Association.

As with the propane industry, the accounting profession has an association that lobbies on its behalf: the AICPA. The AICPA has a large staff of over 500, headquarters in New York City, and a lobbying office in Washington. And, on specific issues, they do not hesitate to retain the services of some of the largest and most well-connected law firms and lobbyists in Washington.

So why would the Big Four accounting firms go out and spend the money to create a new organization to lobby on their behalf when accountants are already paying dues to the AICPA? Because they have concluded that the AICPA can no longer address the critical lobbying needs of the biggest firms in the business.

NPGA has always prided itself on being a “vertical” trade association. Unlike most associations, a vertical association represents everyone in the industry: producers, wholesalers, retailers, and the manufacturers and distributors of associated equipment and appliances. These disparate entities, which in most lines of business are represented by independent and distinct associations, all came together over 75 years ago and created a single association to represent their common interests. A large board of directors representing all segments of this business was the glue that held them together. But does it still hold today?

Over time, we’ve seen a growing number of instances of NPGA taking positions against the interests of certain segments of this seemingly monolithic industry.

In the 1970s, NPGA took the position on behalf of its marketer members that sediment traps – or drip legs as they were called then – were the responsibility of control manufacturers, not marketers. Tank fabricators watched as NPGA worked to block changes to the steel thickness standards governing the manufacture of ASME containers. NPGA has filed several legal challenges to pipeline rate increases at the FERC. And recently NPGA pursued a lobbying strategy to change the tax code to benefit a very small segment of its marketer membership, the master limited partnerships.

How long will the glue hold? Can NPGA continue to represent every segment of the propane industry? Indeed, as in the accounting industry, is NPGA still able to effectively represent both the largest and the smallest propane marketers, let alone the other segments of the vertical chain of distribution?

This question is one that the Propane Education & Research Council must address from time to time as it considers how to spend industry dollars contributed by all marketers. For example, funding safety and education is unquestionably a worthy and desirable use of PERC funds. But what about sales training?

PERC seeks to expand markets and to help the industry to sell more propane. A sizeable portion of its budget is spent to develop and place advertising and to create marketing tools for retailers. But what about training marketers in how to use those tools? Many marketers could use such training, but will marketers who already have sales forces, or who have paid outside vendors for sales training, allow PERC funds to be used to help their competition become better marketers? I’m not sure whether that debate has taken place, but it should.

Last year, the government alleged that traders for BP were manipulating the market resulting in artificial price increases that were shoved down to the marketers and their customers. How long can producers and marketers sit at the same table and discuss lobbying and legal strategy as one organization when one segment may feel that the other is pursuing a strategy that may harm the other?

Retail oil marketers came to the conclusion years ago that they could not work side by side with their producers. The National Oil Jobbers Council, now the Petroleum Marketers Association of America, has long been a retailers-only organization and has often been at odds with its industry’s producers.

Is this what the future holds for NPGA?

The propane industry is not a big industry. While the interests of each segment may differ and diverge from time to time, the industry’s natural enemies are competitive fuels. A vertical industry structure has served NPGA and the propane industry well for 75 years and it would be a shame to see it torn asunder.

In the days when there were marketer companies with names like Petrolane, Pargas, Calgas, Vangas, Tropigas, Pyrofax, Northern Propane, and Skelgas whose CEOs sent their best and brightest engineers, marketing staff, and safety experts to work on NPGA committees for the common good of the industry, rarely was it asked whether the time and financial resources expended were delivering an ROI to the headquarters. It might behoove leading members of this industry to sit back and contemplate whether the old adage that “a rising tide raises all boats” might not still be applicable.

And please do it before I read a headline like: “Propane Firms Form Policy Group”.

Dan Myers worked for 25 years as chief lobbyist and chief staff executive for the National Propane Gas Association until his retirement in December of 2002. He is a member of the LP Gas Magazine Editorial Advisory Board.

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