When we built our house, my builder convinced me to have the propane company supply and own the tank. We were told that the gas price was the same, and that after five years we would own it. This year, our outrageous gas prices caused me to ask some questions and not only am I paying 65 cemts per gallon more than the free market price, but I do not own the tank. I will have to buy them out, and do not yet have a price. The thing is, I like the company we have, they are reasonably priced compared to others in the area (free market price) and would like to keep them. It seems that the last thing they want is to loose a good customer (1000 gallon tank filled 5 or six times a year, payment prompt and full) or have their damn tank back. Is there any way to negotiate the price of purchasing the tank. Should I offer to sign a five year contract at free market rates? Are there any good negotiating tactics I can use to reduce what I assume will be an overpriced purchase price? The tank is 10 years old, and I can probably get it taken out and a new one put in for around 1500 dollars or less.
Where are you located?
When I lived in the country we just bought a tank from a supplier or another person for around 50$ and installed it ourselves. The refiller would come out and inspect the tank and if it wasn’t safe he wouldn’t fill it and would tell us what needed to be done to make it proper.
(It had to be a certain distance from the house, black pipe supplying the house, etc.)
I live in Baltimore, Maryland. This is a buried 1000 gallon tank.
If you look at paying them 65¢ over market per gallon as a lease fee for the tank, you’re paying somewhere around $3500 per year for their tank.
If you can pay someone else $1500 to install a new tank that you’d own, and pay them or someone else market rate for propane, that would pay for itself in six months.
Do you have anything in writing that says you’d own the tank after five years and that you’d be paying market rates for the gas? If so, you might want to think about consulting with an attorney and suing the gas company for breach of contract.
Something else to consider, is that with proper maintenance, a buried tank is good for about 30 years, so your existing tank has lived out about a third of its useful safe lifetime.
My propane tank is owned by the propane company. It’s not buried, and it’s 500 gal. The propane company charges $35/yr rental on the tank, and there’s no contract so I can cancel at any time. The propane price seems to be what the going rate is around here ($2.25/gal at my last fill up).
I can’t imagine using that much propane. I only use it to eat, and probably used about 450 gal this winter.
StG
I’d be interested to know who is responsible for periodic hydrostatic testing, cathodic protection, and so forth in both arrangements to determine true cost of ownership.
Just why would Dauerbach need protection from me? What are you implying?
Not from you, Doc. The sort of protection you provide, when you’re buried with a big metal tank. You inhibit corrosion, don’t ya know?