Preparing for the backlash

What have you done to alleviate the terror in the eyes of residents in your hometown who are bracing for a winter that promises higher-than-ever heating bills?

Pat Hyland

This fall, good news is as rare as $1 a gallon gasoline. Newspaper headlines across the country are blaring the fear and despair of Americans in response to the government’s projections of energy price hikes and colder-than-normal weather.

Nationally, residential propane prices are expected to average $1.80 per gallon in 2005 – up 25 percent over 2004 – and $2.07 per gallon in 2006, according to the Energy Information Association. Across most of America, propane has increased 120 percent over the last two years.

Households heating primarily with propane this winter are expected to pay an extra $325, or 30 percent more, than last year, according to EIA.

The fact is, nobody will be spared from paying more for heat this winter.

On average, households heating with natural gas can expect to spend about 48 percent more – an extra $350. Those heating with heating oil can expect a 32 percent increase, an average of $378 more. Electricity prices are predicted to be just 5 percent higher.

Those frightening projections are compounded by reports from the National Oceanic and Atmospheric Administration that temperatures this winter will be 3.2 percent colder versus last year. Historical data suggests active hurricane seasons result in lower than normal temperatures.

Meanwhile, homeowners in greatest peril – those who depend on federal assistance to help pay their heating bills – are facing $200 million in cuts to LIHEAP program funding.

What can one small LPG marketer do in the face of such ominous circumstances?

• First, be proactive. Tell the folks who rely on you to keep their families warm that it looks like a tough winter ahead. Don’t let the few cave dwellers who have missed the bad news find out by reading their December invoice.
• Explain why propane prices tend to fluctuate, especially after Hurricanes Katrina and Rita. Be sure to note that all energy prices are up, not just propane.
• Explain that you don’t make any more money when you pass along your price increases. The fact is, it gets harder for marketers to maintain profit levels because they usually have a harder time collecting receivables.
• Encourage balanced billing payment plans to allow customers to spread their annual costs over many months.
• Help educate them about energy saving tips that could lower their energy bills this winter. A list of tips from the Propane Education & Research Council, National Propane Gas Association, American Gas Association and the U.S. Department of Energy can be found at www.usepropane.com|~www.usepropane.com/
  .

It’s going to be a cold and expensive winter for everyone. Take steps now to keep your customers from getting steamed at you.