As we all know, we are experiencing one of the coldest winters in decades along with perhaps the worst propane gas shortage ever. This situation was addressed at the annual meeting Jan 30th, 2014. While Heartland Cooperative Services is not taking on new customers because of the shortage, we are making every effort possible to make sure our existing customers are supplied. Dennis Schultz.
Wholesale prices vary wildly by as much as a several dollars per gallon within a 48 - 72 hour period. With shortages so acute, we are paying premium prices to have propane shipped from as far away as Texas. These pricing and supply challenges are unprecedented. In light of this the management of Heartland has made two major decisions in order to best serve our customers.
First, we will continue to honor the contract prices for all of our Flex Fuel contracts. (If you are not familiar with this program you can read about it HERE.). While some suppliers are utilizing a clause in their contracts that allows them to raise prices under these extreme conditions, we have decided not to invoke that clause for the good of our customers.
Second, for all our customers, including those who are part of our Automatic Delivery Program, we are doing our best to make sure that you have the propane you need to operate your business and keep your family safe and warm. To do this we have instituted a rationing program. Rather than delivering the usual full amount, we are delivering a percentage depending on several factors. This means we must make more deliveries to each customer. Although this creates added expense for Heartland, it is our goal to do everything we can to make sure each customer has enough to maintain operations.
Because we will be making so many more deliveries and honoring contracted retail prices,( that are at times, two to three times below what we are currently paying wholesale). A negative effect on Heartland profits can be expected however we feel that serving our customers is more important. We are certain that through proper sales and management practices, we will be able minimize the impact of this shortage by year’s end.
This situation we are facing now is a perfect example of Heartland’s dedication to the principles of “Y.E.P.” - Yield, Efficiency and Profits - for our member producers. In a relatively short period of time (though it may not seem like a short time) the weather will be warmer and the shortages will ease but one thing that will not change is Heartland’s commitment to servicing its customers no matter what it takes.
GM / CEO