Today’s consumer markets show promise for propane

August 12, 2016 By    
Photo: iStock

Photo: iStock

“We have a window of opportunity, and that window will not be open forever.”

Former AmeriGas President and CEO Gene Bissell spoke those words during the Propane Education & Research Council’s (PERC) meeting last month in Napa, Calif. The council member offered that opinion during a propane industry-centered presentation from Mike Sloan of ICF International.

Much of the meeting focused on the council’s proposed 2017 budget of $41.4 million and the continuation of its new consumer education campaign featuring a dog named Blue.

But there was also other news and notes worth sharing. For example, programs funded by the budget are expected to drive 120 million gallons of incremental propane sales, according to ICF International.

Sloan also offered three major points affecting next year’s budget, leading Bissell to add perspective with his “opportunity” quote as it relates to residential programs.

1. The low propane price environment is creating significant opportunities for growth.

“The timing is right for a push into the consumer markets, and the residential and commercial markets, where propane is competing against electricity,” Sloan says.

2. The real opportunity remains in the engine fuel market, but the changes in the energy markets – with a decline in gasoline and diesel prices – have made that market a little more challenging for propane.

“The industry will have to work a little harder to grow and penetrate that market over time,” Sloan says.

3. On the broad propane supply side, the industry will see a continuing, relatively slow shift away from the market where supply growth in the United States exceeds the infrastructure to consume or export propane.

“When new facilities come online and international markets continue to develop, the U.S. propane supply market will become more integrated with the international market,” Sloan says. “That is more likely to lead to a little bit of an increase in propane prices as we become fully integrated with international markets and subjected to a little more volatility.”

A continued improvement in the housing market, foreseen for the next couple of years before leveling off, also bodes well for propane growth prospects, Sloan adds.

Speaking of housing, look for PERC to pursue new opportunities with manufactured and modular homes, where it can showcase the many improved propane technologies, such as water heaters, boilers and small power generation units. Stay tuned for more about this effort.

“In this whole residential space, we want to make sure the builder and user are aware of the features and benefits of propane,” says Tucker Perkins, chief business development officer at PERC.

More propane industry conversations seem to take place today about combined heat and power systems, or CHP, as they are commonly known. The U.S. Department of Energy (DOE) defines CHP as an efficient and clean approach to generating on-site electric power and useful thermal energy from a single fuel source.

The industry’s push to displace oil across markets is now beginning to apply to power, Perkins says. The trend shows a migration from centralized power systems that are largely oil to decentralized systems that are largely natural gas and propane, he adds. Moreover, the industry looks to benefit from $6 million in DOE research on CHP systems.

“We think we have something to offer in CHP,” Perkins says. “We are looking at successful projects in the field at 1 megawatt.”

Perkins also speaks on a larger scale about propane and its positioning against oil, saying, “We’re beginning to talk about propane as its own brand or sister to natural gas and getting away from liquefied petroleum gas, separating ourselves from this nasty fuel called oil.”

LP Gas award winners

A congratulations to digital media content producer Allison Barwacz and associate editor Megan Smalley for winning American Society of Business Publication Editors regional honors recently.

Barwacz won silver in the online, web feature article category with her piece titled “The digital revolution and its impact on the propane industry.”

Smalley won bronze in the print, original research category with her report titled “Concealed carry policy discussion.”

Brian Richesson

About the Author:

Brian Richesson is the editor in chief of LP Gas Magazine. Contact him at brichesson@northcoastmedia.net or 216-706-3748.

1 Comment on "Today’s consumer markets show promise for propane"

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  1. Isaac Enio says:

    Earlier today the Farmer’s Almanac predicted that this winter will be an exceptionally cold one. I imagine this will have an affect on the propane industry, particularly in the Northeastern region.