Guide to Propane Co-Ops

propane co-ops

When you think of buying propane, co-ops or co-operatives probably aren’t the first things that come to mind. You might think agricultural co-op, consumer co-op or possibly educational co-operative. Maybe you’re familiar with worker co-ops, social housing co-operatives or non-profit volunteer organizations that function in a co-operative manner.

But propane? What’s that got to do with a co-op? Plenty. All over central and southeastern Pennsylvania, people regularly purchase propane from co-operatives. Some of the largest propane consumers are farmers. Poultry farms, in particular, use huge quantities of propane to keep chicks and turkey poults warm during their vulnerable juvenile stages.

They use propane because it’s the best solution for their heating and other energy needs. Propane is cheap, clean, easy to transport, convenient to store and, above all, an incredibly safe natural fuel to use on farms. Subsequently, agricultural propane co-ops have flourished across the nation. Shipley Energy is part of the farmers fuel co-op and supplies much of the PA co-op propane.

While Shipley Energy has been part of the PA propane co-op business world since starting eight decades ago, the system of peoples’ co-operatives has been around far longer. Let’s look at what co-ops are, track the history of the co-operative movements and examine how co-ops are structured in the propane supply business. Then we’ll see what benefits these propane co-ops can deliver for you.

What Are Co-Ops?

Co-operatives are self-administered or autonomous associations where people voluntarily unite to meet common cultural, social and economic aspirations or needs. Co-ops form for the common wealth of a collective group for greater prosperity by banding or working together rather than independently competing. Co-ops, like in the propane industry, are jointly owned businesses managed by the same people who use their products or services.

what is a co-op

Co-ops are best defined as enterprises operated by members for mutual benefit. People within a specific region or demographic area collectively own them. Central and southeastern PA, where Shipley Energy operates, is a good example of a regional co-operative you can belong to. Products like propane and services such as propane delivery serve the common good of consumers. Farmers and other producers in the PA agricultural community greatly benefit from the unified efforts of co-operating with each other.

Consumer co-ops are not to be confused with non-profit organizations. Co-ops in the propane industry must have revenues that exceed their operating expenses. Without that positive cash buffer, no business could survive. Co-operatives have their bills to pay, too. They have property, vehicles, employee wages and taxes to pay. Above all, propane co-ops have to purchase the fuel before they can deliver it to members.

How Co-Ops Handle Profits and Savings

Co-ops differ from conventional capitalist business ventures in how they handle profits. Rather than a few individuals pocketing the surplus or larger shareholders receiving disproportionate dividends, co-ops equally return the extra money to their members based on how much each has contributed during the fiscal year.

The co-operative system uses the term “net savings” as opposed to “gross profit.” That’s because the combined economic power of the masses collectively cooperating to purchase commodities like propane in large bulk amounts results in initial purchase savings. The “profit” money is actually bonus savings, and it’s refunded in the form of cash back or stored in equity shares. It’s simply a proportion of each member’s money coming home.

Shipley and Propane Co-Ops

Co-ops have proven to be a win-win situation for people in similar occupations, regions and socio-economic situations. Shipley Energy is part of that unified movement and supports the farmer’s fuel co-op through the trading region. Purchasing bulk propane through the co-operative funding of local co-op members passes on annual net savings to the agricultural industry in PA.

shipley co-op

We’ve been in the energy supply business since 1929. During these expansion years, Shipley Energy has been a guaranteed and diversified propane supplier. We now operate the largest fleet of dependable propane delivery trucks, with a dedicated team working 24/7/365 to ensure propane is available when and where it’s needed.

Much of Shipley Energy’s success is due to co-operative members. It’s also due to the formation of consumer co-ops that started years ago.

History of the Co-Operative Movement

Cooperation goes back to the dawn of society. Humans are social creatures and have always banded together for communal welfare. That started with indigenous tribes organizing for mutual benefit and expanded as the human race evolved. Tribes became towns, cities and countries. At the core of human survival was co-operative societies.

By the 1800s, European commercial structure took a significant shift. The industrial age produced great wealth, but it also formed large disparity in wealth distribution. Unfair labor practices and price structures led to worker unions and creative consumer movements.

Capitalist, free-enterprise systems were threatened by socialist ideas, including state-run dictatorships and communist societies. The division between haves and have-nots increased, leading to power struggles, revolutions and all-out war. These were trying times, but they were also innovative times.

The Rise of the Co-Operative

Out of unrest and inequality came a concept called co-operatives. Co-ops allowed the individuality of human effort to prosper along with the economic protection of a collective group. And it all started with a bunch of Scottish weavers selling discounted oatmeal to their local workers through the Fenwick Weavers’ Society.

Weavers in Rochdale, England, recognized the success of their Scottish brethren and refined co-operatives based on certain principles, including ethics. The Rochdale Principle of co-ops laid out seven core guidelines:

  1. Concern for community
  2. Cooperation among co-operatives
  3. Voluntary and open membership
  4. Democratic control by members
  5. Autonomy and independence from state interference
  6. Economic participation by members
  7. Promoting education, information and training

The early co-op founders may not have had propane in mind when they realized the whole would prosper greater than its parts. But they certainly knew human nature. Co-operative values were quickly established based on:

  • Solidarity
  • Equity
  • Equality
  • Democracy
  • Self-help
  • Self-responsibility

They also dictated ethical values Shipley Energy strongly adheres to. They include:

  • Honesty
  • Openness
  • Social responsibility
  • Caring for others

Today, there are thousands of co-op associations across America and around the world. The propane co-op in PA is one small but important part. It’s especially so for farmers and agricultural business that make up a core of Shipley Energy’s co-operative customers.

It’s vitally important to know what co-operatives are not. Co-ops are not communist organizations. Co-ops are democratically organized associations that encourage free-enterprise thinking and actions. Co-op efforts can help hard-working and free Americans flourish by combining their money for better purchasing power. These savings eventually trickle down to the consumer as well as providing core funds for state and national social services.

How Co-Ops Are Structured

The difference between co-ops and other organizational types boils down to structure. Co-ops are businesses — businesses with a difference. Unlike privately held corporations with disproportionate stockholder shares, co-ops are owned and controlled by their members. They’re locally owned by regular people who are shoppers and consumers of their own product, like propane.

local propane co-op

Co-ops are the only business where the shoppers own the store. They’re democratically controlled through a system where one member has one vote. There’s no hierarchy of people higher up who prosper because they have greater economic or capital power to buy up the majority of shares.

The “one member-one vote” structure ensures the co-op acts for the common good of all its members, not just a privileged few. Membership in a co-op is strictly voluntary, with the only restriction being members must reside in the defined trading area. Or, in the case of commodities like propane, have the fuel delivered within the business locale.

Leadership of and Membership in Co-Ops

Co-op members elect a board of directors to oversee the business. Any member can let their name stand for election, which takes place at an annual general meeting. During these events, regular members also vote on resolutions as well as openly making suggestions for the benefit of the group. Ultimately, all decisions are made locally and in the best interests of the community, not in some remote corporate head office.

Membership in co-ops is open to everyone in the area. It means actively having a part in the business. This includes financially benefiting from better buying power, lower prices and economic returns like annual cash rewards and accumulating equity in the co-op company.

By joining a local co-op in PA where Shipley Energy operates, you can greatly benefit from group bulk purchasing of propane and related products:

  • Collective funds allow Shipley Energy better access to propane supply networks and make attractive opportunities to purchase bulk discounts.
  • This purchase commitment is returned to you through annual payments as well as accrued equity in your local co-op.

How the Co-Op Works

Co-op members are issued an individual number to track their purchases. Returns operate on a simple principle of the more a member spends supporting the co-op, the more return they’ll get. This is as equal an opportunity as any business structure can offer. It’s how co-ops have survived and prospered over many economic cycles and world changes.

Co-ops are not exclusive clubs, though. They’re open to public shopping and allow everyone access to co-op products and services regardless of if they have a number or not. This lets the entire community benefit from collective purchase and distribution. The only catch is, without a membership, there are no bonus rewards. It’s no wonder membership in local co-ops is so popular.

The benefits of co-op membership far outweigh not opting in. In fact, there are virtually no disadvantages to a co-operative business structure. This certainly applies to purchasing propane through your co-op.

Benefits of Buying Propane Through Your Co-Op

The primary financial benefit of buying propane through co-op members like Shipley Energy is to take advantage of bulk purchasing power that co-operative funds can negotiate. Propane is a traded commodity like other fuel forms. It’s subject to price fluctuations due to supply and demand pressure.

co-op benefits

Weather is a main factor affecting all propane pricing. That’s no exception for co-op propane. Heating demand for propane during the cold winter months historically drives prices above what they’d be in the milder months of spring and fall. Summer has a spike effect on propane when air-conditioning units are in full operation.

Bulk purchasing allows a PA propane co-op supplier such as Shipley Energy to purchase large volumes at low prices in off-season times and store them for high-season sale. Because of the co-op business ethic, these savings pass on to you rather than being taken as extra profit for the propane company.

Co-Op Pricing Terms

There are a few terms to know about propane pricing that apply to co-op members.

  • Cap Price means there’s a ceiling put on your propane costs. This is insurance against extreme market conditions where prices soar unexpectedly high.
  • Fixed Price guarantees you a locked-in rate. Usually this is for one year.
  • Market Price allows you the opportunity to take advantage of price drops. Your propane price will be set at the current market price. Often, that’s set daily.

Other Types of Co-Ops

The main purpose of a co-op is to provide benefits to its members. Financial benefits are only one part of the return you’ll get from being a co-op member. Many co-ops sell far more goods and services than agricultural supplies like propane fuel. Consider these benefits that many co-operative associations offer:

  • Banking services like credit unions that give loans and mortgages
  • Insurance services for autos, homes, farms and equipment
  • Fully stocked supermarkets with meat, produce and dried goods
  • Pharmacies for all prescriptions and health needs
  • Other fuels like gasoline and diesel fuel
  • Crop supplies, animal feed and hay
  • Convenience stores and car washes

Co-op benefits extend into the entire local community. Co-ops also:

  • Employ full-time workers with great pay and benefit packages
  • Contribute to various charities, including those helping hospitals and children
  • Promote voluntary community service organizations
  • Assist with local recreational events like fairs and rodeos

All of these auxiliary benefits stream from ordinary people having the confidence to join and support their local co-op. There’s a sense of satisfaction that comes from belonging to a noble cause like supporting your community for mutual savings and prosperity.

Supplying Propane Across Central and Southeastern Pennsylvania

Shipley Energy understands that commitment. Supplying propane and other fuels to the towns and farms of central and southeastern PA is part of Shipley Energy’s contribution to the membership of local co-ops.

In eighty years of operation, Shipley Energy has advanced with the times. Keeping up with technology has been part of that road. Today, we track all of your fuel needs and supplies electronically with a sophisticated system. It provides insurance against running unexpectedly low, especially in peak consumption season.

This includes state-of-the-art weather forecasting techniques as well as the day-to-day calculation of market pricing. As part of the co-op openness value, we post our propane prices on the Shipley Energy website. It’s boldly there for our valued customers as well as our competitors to see.

When you choose Shipley Energy’s co-operative propane service, you’re taking part in a movement much larger than yourself. You’ll benefit. Your fellow members will benefit. And your entire community and trading area will benefit. If you aren’t a co-op member, join today.

You can check out our propane prices online. For more information on Shipley Energy’s exceptional propane and other fuel services, please contact us to speak with one of our highly trained energy advisors.