Diesel-focused company finds new opportunity in propane delivery

November 19, 2014 By    

Pacific States Petroleum didn’t have a propane division two years ago. Now, it’s approaching 1 million propane gallons sold.

“We started with nothing and two years later you can see the amount of growth and development we’ve had,” says Jason Edwards, general manager of propane operations. “We’ve invested into the longevity.”

Pacific States Petroleum

Pacific States Petroleum has 26 trucks in all.

Pacific States ventured into propane in 2012 because owner Kevin Maddox wanted to subsidize his northern California business in the winter when diesel sales typically slow. Maddox recruited Edwards, who had seven years of experience with another propane retailer in the region, to lead the development of his propane division.

Part of the opportunity Maddox saw was to offer bulk propane services to Pacific States’ bulk diesel customers. According to Edwards, about 20 percent of Pacific States’ current propane customers are ones who previously did business with the company.

Edwards and Pacific States’ four propane sales reps – one located in each of the core areas the company serves – have quickly developed business in and around San Francisco, in California’s Central Valley and in Sacramento, Calif. Pacific States largely serves commercial and industrial companies and only has about 10 residential accounts in all, according to Edwards.

“We’re not a residential-focused business,” he says. “That kind of parallels with the diesel side of the business. Our business was based on diesel and doing onsite fueling to generators, excavators, backup pieces of equipment and heavy machines that don’t have the ability to go to a CFN (commercial fueling network) or gas station for fuel.”

Pacific States’ propane division targets the same kind of businesses for propane, seeking out opportunities with construction sites, new and existing jobsites and industrial customers who use propane for forklifts and commercial heat.

“The other component is resellers,” says Edwards, who estimates that Pacific States has about 220 propane customers. “We don’t have a lot of them at this point, but that’s one of our focus points. We’re trying to leverage our business relationships with gas stations for bulk refueling.”

Edwards also says Pacific States has a unique approach to winning business.

“One of our biggest selling points is we provide our customers with brand-new equipment, whether it’s cylinders, cages, tanks, pumps, motors or dispensers,” he says. “Everything we put out is brand new and straight from the manufacturer. It gives you the piece of mind that you’re not getting refurbished, outdated equipment.”

One move that’s made the propane division more efficient is the addition of a bulk tank. Pacific States built a storage facility with a 30,000-gallon tank in Benicia, Calif., eliminating 180-mile round-trip bobtail runs to source product.

Serving northern California customers was a challenge before the storage facility was established. Edwards says the most efficient way to serve the territory was for bobtail drivers to load up at a supply location and then immediately deliver gas around the region.

“It was a very inefficient process, but it was the only option we had going into a new business,” Edwards says. “Being able to go from those 180-mile round-trips in which we had no control of fuel or pricing to having the autonomy to buy fuel, leverage markets and have our own storage reduces vehicle mileage and employee expenses. That has really contributed to our bottom-line profitability.”

COMPANY: Pacific States Petroleum

LOCATION: Pleasant Hill, Calif.

FOUNDED: 2001

EMPLOYEES: 42

CUSTOMERS: 220

PROPANE SALES: 750,000 annual gallons

ONLINE: www.pacstatespetro.com

Kevin Yanik

About the Author:

Kevin Yanik is the senior editor of LP Gas Magazine. Contact him at kyanik@northcoastmedia.net or 216-706-3724.

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