Propane Blues

I was driving to work the other morning listening CBC. One of the news items was a story about the fact that the cost of propane in the rural areas of Ontario had almost doubled in the past few months (as natural gas is not available in rural areas, folks use propane). The story got my attention in part because we use to cook, heat our water and occasionally our house using propane. As a young family with only one income, that sort of increase would have put a serious dent in our monthly budget. I think there would have been some months where we would not have been able to both pay the propane bill and buy food. So I turned up the radio and listened to the story and the explanation from the "independent petroleum expert"

There are apparently two reasons why the cost of propane has increased so dramatically. One is quite simply (according to the expert) because more people are using the stuff. In the fall the corn farmers of the mid western United States needed more propane to dry their bumper crop; ever since November for most of the northern US and much of Canada it has been damn cold and people are using more to heat their houses. The expert didn't say that there was a shortage of propane in the ground or that the costs to process and ship the stuff had increase - the stuff had gone up because more people were using it. In other words - it cost more because the company could charge more and knew people would have no choice but to pay the increased costs.

The second reason why the price has increased (again according to this expert) is the decline of the Canadian dollar as compared against the American dollar. Really? Apparently the North American propane prices are set in Texas, which quite frankly seems a bit strange as it is Canadian propane. I don't understand why Ontario resident's propane costs reflect American prices. We have to pay more because the price is set in American dollars (and therefore we have to pay the exchange rate) in spite of the fact it never left this country. The absurdity of this argument becomes quickly apparent when one realized that the propane that was delivered to the rural family this week was bought weeks if not months ago when the Canadian dollar was at par.

I think understand capitalism. I think I understand that under that theory those who control the resources will maximize their profit regardless of who is abused or exploited.  What I don't understand is why they bother to pretend that they are not money grubbing SOBs. If you are going to rip me off - just do it.  Stop lying to me about the reasons why.

News Flash ------Joe Oliver, the Federal Minister of Energy, has ordered the price increases to be reviewed by the National Energy Board. Maybe I am being a bit too cynical.... but as much as it saddens me to say it. If your propane bill went up this month don't expect a fat rebate check any time soon.