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Ferrellgas Partners LP Message Board

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  • tmac4176 tmac4176 Dec 23, 2009 4:14 PM Flag

    Spot price for propane

    its not all profit,they have to transport, store, payroll for the employees, medical etc. don't be so quick to call out the regulators. big diff between wholesale & retail.

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    • <<its not all profit,they have to transport, store, payroll for the employees, medical etc. don't be so quick to call out the regulators. big diff between wholesale & retail. >>

      So do retail gasoline stations, and their markup is about 20%. They have all the same expenses as propane dealers.

      • 1 Reply to surn_rules
      • Sorry, wrong assumptions. Propane dealers face much more overhead than your corner gas station.

        First, you drive to the gas station to fill up. Propane dealers have to deliver the fuel to you, increasing the cost of payroll, vehicle expense, fuel, and insurance.

        Second, you own the tank on your car. Most propane companies have to purchase, maintain, paint, safety inspect and pay taxes on the storage tanks at customers houses. In addition to the tank at your house there is also the cost of the pressure regulators.

        Third, most customers pay in advance at the pump at the gas station. Propane customers generaly have up to 30 days to pay for their delivery, effectivity tying up capital and increasing the possibility of slow or no pay customers.

        There are many more factors to numerous to list ie. multiple phone lines, service departments, collection costs, increased accounting duties and so on.

        I am by no means defending FGP on their pricing policies as I believe that they use predatory tactics, offering below cost pricing to gain new business and above market rates to unsuspecting existing customers. I just wanted you to know that the comparision to gasoline stations was not acurate to use.

 
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