Propane Contract
 

Got my contract for this year. I usually contract in July for 800 gallons for the season. I budget bill mine and have the bank send them $150 a month. I got ahead last year when i put in my wood stove. I did not know how much i would use the wood stove. Well we used 48 gallons, mainly for the oven and stove. So my tank is full and i have about $1100 in my "gas" bank. We are ahead, but i think we will keep sending the $50 a month. Let it build up. When we are too old to use wood, we will be have gas to spare. I know that that sounds stupid, but it makes sense to me. i won't miss it every month. But, if i get hurt or dead, then they don't have to worry about the heat bill.

Are you saying your gas company has $1100 and you are going to pay them an additional $50 per month just in case?
Is your price set?
Do you own your own tank?
What if the company goes out of business?

In my opinion, that money should be in your bank.

What if the company goes out of business or changes hands? Good chance you could lose your money.

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Here we can contract propane, but it has to be paid for ahead of time and there is no monthy payments. If a company is sold to another, the contract legally goes with the new company as part of them taking over. If it goes out of business then you are out of luck. Our local propane supplier has been bought out recently and service and contracts are uneffected. We haven't contracted propane yet because it seems that the price is lower most years than what they try contracting it for and we just pay cash on delivery.

Doesn't make sense to me. Wouldn't you rather put that money in YOUR pocket, rather than the gas company's? If the company went belly-up, you'd be standing in line trying to get some lawyer to get your money back.

Kinda depends as to how Randy is set up financial. There was a time when such a deal was my lifestyle choice.

He mentions dieing...and his family being ok for heat... he mentions aging and s safely net for health challenges that are smart to plan for.

What do you honestly make in the bank?
What impact would negative bank interest have on your bank accounts and investments.

I might seek out another storage tank but fuel like food is good to have a claim to it or on site even better...
Guess I see it as instead of having water rights Randy is buying gas a claim.

Start a new account at the bank and put money into it every month. Do not count on a company to give you what they owe you.

..............When you prepay , are they allowing you to "Lock In" at a low price , regardless of what the market price does ? I think you left out some of the details . , fordy

One additional note, some of the "big" propane companies (i'll not name then) begin charging a % of your remaining balance that carries over year to year if you constantly "overbuy" or have a big "bank"; They do this to discourage folks from buying absurd amounts at low rates, and taking advantage in the high years. Rates for my winter contracts as of today are $1.39/gallon, last year we got a steal at $1.89, and the year before $2.21; With that said, if my company did not charge a fee on remaining overbuy balance, i'ed be smart to buy 4000 gallons at this years price, and be locked in to that amount for the duration of that balance (or approx 7 years at my usage).

Save your $50 a month for 10 months and you have $500 or 20 months and you have $1000. This is about what a used 500 gallon tank or 1000 gallon tank, respectively, sells for here. Put it next to your existing tank and use you credit balance to fill it when the price is low.

Propane doesn't spoil. You now have a full tank that will last years at your current rate of use. It's also a great prep if TWAWKI ends.

If your tank is owned by the propane company, and you're not buying their minimum, they'll start charging you rent on the tank.

We got tired of being locked into one company, especially after we found out they'd quote a lower price to someone who didn't have their tank. I'd suggest buying at least one used tank, cancelling your current service - they'll refund your overage plus the gas they pump out of your current tank, and shopping around for the lowest price in your area. We bought 3 tanks, and the difference in propane price nearly paid for 2 of them.

This is a type of prepping, just as much as storing food. The fact that the commodity is propane is somewhat irrelevant. Provided the commodity can be used or sold, so what?

Say that Randy gets a total of $2,000 worth of propane at $1.50/gal and the price spikes to $3/gal this winter. Those of you who have suggested that he put the money in the bank would have him do WORSE than what he is doing now. When is the last time you DOUBLED your money in a bank account in six months? At a minimum, he can coast through the spike at half the cost the ants would pay. If he has the wherewithall and can SELL some of his excess, then he has made money. He only loses if the price of propane drops.

Bank assets are easily attached in any legal dispute. Few attorneys are going to even look at a propane surplus, much less try to attach it. If you want to keep your fruit for easy pickings and plant your orchard near a highway, good luck to you. I am somewhat baffled by people suggesting "investing" in bank accounts. No business ever stores much more cash than will be needed in the immediate foreseeable future. Any excess is distributed or plowed back into investment in the business.

Within reason, building up a credit for propane makes sense, just like storing food bought on sale makes sense. The tipping point comes when the food starts to spoil or get too old and lose nutrition, or the propane is useless because a move or burnt down house prevents its use.

Way to many things not known .It appears that this guy is prepaying at what ever the market is at delivery .I never heard of a co that would take payments on a pre buy . I knew a guy forgot to read the small print on a pre buy contract too ,When they read it to him he was really upset .Propane prices went threw the roof so his small print only let him order a small amount then for the rest of that trip regular price applied .

Another thing should that Co file bankruptcy the odds of Joe Smoe getting a dime is slim to non . A tank out back with LP in it yes makes some what good sense .Trusting someone else with your money on a fine print deal ,not me .

Should I die I hope the widow has the good sense to find a guy with a house in the Bahamas complete with maid and butler so that $1100.00 would go a long ways toward a new outfit for the hunt :runforhills:

the co-op i work for pays out a healthy interest rate on credit balances over a certain amount. I dont know how it would affect his propane contract for us that is separate from the savings and we set the price each year. our prices are really good right now and we are allowing folks to contract for the next two winters.

I'm with the no trust guys, I bought a used tank the same week i had my house moved onto my property. I buy gas from whoever I want to and my tank gives me a little over a years worth.

The whole monthly payment rent the tank thing has no appeal to me at all.

If i where to lock up money in propane id want it in a tank on my property not a ledger at the propane company

Chances of vandals, a leaking valve, or thieving neighbors are greater than the chance of a propane company going bankrupt, and those who have paid money for contracts would be at the head of the line in any distribution of assets anyway.

A lot can go wrong with this savings plan; when company/coop sells or goes out of business you have no security as to what will happen.

Many times there is fine print as to needing to take delivery or the contract ends. At the least the prices will change, at the worst they flush and start a new setup each year and your account resets to zero.

As well if you have a leased tank you are required to take so and so much product every year or they cancel you out, and so on.

Making a summer contract for winter delivery makes a lot of good sense; but trying to carry it on indefinitely into a propane fund at a single supplier over years and years is a very risky thing.

Bank is for storing money and assets long term, propane company is for working out a good deal of 12 months of fuel at a time, gets sketchy trying to go beyond a 12 month period. They won't like becoming a bank and have to carry your money and account and contract prices beyond a year, it makes their books extremely messy and difficult to maintain. Their business is selling product, not a bank account, so you are gumming up their system. Their bank they use views these open accounts as a liability - it just doesn't work well for them in most cases.

I predict you will get flushed out of the system sooner than later, contracts voided?

Paul

Is that wrong, and how!

Their creditors (banks....) lock up first crack at assets, and they have been doing this long enough they have it all locked down legally, anyone with an account is about second from the last in line, and money in a bankruptcy runs out by the second in line from the front.......

Paul

Creditors with liens on equipment would be at the head of the line. If the company goes bankrupt, all that's left is the ledger entry as the cash is gone.

I agree. Those with contracts prepaid are way down on the list. Lost money that way though it was not a propane company.

Propane companies are usually locally owned small companies operating as a sort of franchise. They go bust as easily as any other local badly run company.

Propane company here went bankrupt in January 2014, around the time it turned REALLY cold. Not only was anyone who prepaid completely out of luck, since the company owned the tanks, no other company could/would fill them for fear of the trustee coming around to collect the tanks, and they were told they couldn't touch the connections to reconnect the homes to other tanks due to liability concerns with the trustee and creditors. Lots of people left with no heat at -30, lots of old wood stoves started up in rough shape, some real jerry-rigged heating setups going on.

Is that wrong, and how! (sorry, couldn't resist)

The first ones in line are the lawyers.

Learned something here. Will have to review our contract (although the company we use has been gaining customers).

.............Just as in a Corporate bankruptcy , the stockholders lose their entire investment , whereas the creditors receive ownership and divide any remaining assets . , fordy:eek:

Put the money in a savings account, you won't have to worry about the company being sold or going out of business then.