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AMERIGAS
Amerigas is the largest United States marketer of propane by gallonage. Its decentralized management model, like those of the other “majors” Ferrellgas and Inergy, developed in response to its relationship with the major refineries, which required that Amerigas maintain “keep dry” contracts to pull refinery by-product to sell as heating fuel. This byproduct could not be managed by the Northern and Midwestern refineries, that lacked the storage to separate the various high-end gaseous by-products, but sold them as a soup of varying quality to the major propane marketers, first among which was Amerigas.
Amerigas was a fierce rival of Level Propane because Level threatened to loosen Amerigas’s market dominance by means of its innovative marketing system. These innovations, together with Level’s exclusive product sourcing of the Texas Eastern Pipeline, product hedging and competitive pricing made it the bane of Amerigas. At this point it is unclear whether Amerigas was in on the initial scheme or brought in later, but it is clear that Amerigas held the going concern assets of Level Propane in October, 2003, and the original conspirators anticipated, in May, 2002, a transfer of the Level assets to Amerigas in 2003.
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