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2021 State of the Industry: Forging ahead

December 15, 2021 By    

This year, the propane industry staked its claim to a seat at the table in a heated national energy conversation.

A new messaging campaign spearheaded by a joint task force of leaders from the National Propane Gas Association (NPGA) and Propane Education & Research Council (PERC) raises propane’s profile as a clean energy that accelerates decarbonization and contributes to energy equity.

A majority of respondents to LP Gas’ survey support the industry’s renewed focus on environmental messaging. (Photo courtesy of FerrellGas)

A majority of respondents to LP Gas’ survey support the industry’s renewed focus on environmental messaging. (Photo courtesy of Ferrellgas)

A new brand promotes propane as “Energy for Everyone.

The effort marks a bold shift in how the industry communicates propane’s environmental benefits, and leaders have asked propane marketers to step up as champions of the message.

As such, LP Gas conducted a survey to understand the extent to which marketers believe issues related to climate and the environment are affecting their businesses and whether the industry is headed in the right direction to ensure propane remains a viable energy source in the future.

We found that while most marketers support the new direction, more work could be done to unify their visions for the future and to meet successfully the complex web of challenges they face.

Threat perception

The majority of propane marketers – 58 percent – in a survey of over 100 respondents indicate that issues related to climate and the environment rank as important or the most important issues in their list of concerns for the industry.

Still, a substantial number of marketers indicate these issues are unimportant or the least important issues – 22 percent – or are unsure where these issues rank in their list of concerns – 21 percent.

Respondents who fell on the “important” side of the ranking were more likely to report concerns about sustaining a healthy environment for future generations, while those on the “unimportant” side were more likely to question the validity of anthropocentric climate change theories.

But stances on climate change theories on their own don’t explain why the majority of marketers rank issues related to climate and the environment as important. One concern – government overreach – unites respondents on both ends of the ranking.

Supply stability and pricing are among the issues propane marketers say affect the viability of their businesses going forward. (Photo by Nick Bellucco, Superior Plus)

Supply stability and pricing are among the issues propane marketers say affect the viability of their businesses going forward. (Photo by Nick Bellucco, Superior Plus)

Take one explanation for why issues related to climate and the environment are the least of a Texas-based marketer’s concerns: “Environmental issues are not important to me. Only regulations for environmental issues concern me.”

Compare that to a nearly identical statement from an Arizona-based marketer, who marked issues related to climate and environment as important: “Environmental issues are not important to me, but the reaction of the government to these issues and their negative impact on our industry is important.”

While both marketers express concern about government action, they part ways over perceived threats to the viability of their businesses.

The Texas-based marketer goes on to note that environmental issues will not influence business decisions in 2022 and beyond: “We are a small operation, so I don’t think it will have much effect in the short term.”

Others who mark environmental issues as unimportant cite factors they believe are more pertinent to the success of their businesses, including supply, pricing and labor.

Source: LP Gas 2021 State of the Industry Survey

Source: LP Gas 2021 State of the Industry survey

“It comes down to the price for most consumer decisions,” says one marketer in Florida. “Educate the market on energy efficiency, and the clean burning just becomes a bonus.”

In contrast, the Arizona-based marketer who ranks climate and environmental issues as important anticipates an existential threat to the business: “The potential impact of environmental legislation is leading me to think about leaving the industry before the value of my company is diminished.”

Others feel more confident about their ability to stay in business but still express an urgent need to stay ahead of the problem.

“The threat of being displaced by electricity or being placed under heavy burden are real,” says a marketer in the Mid-Atlantic region.

That a majority of respondents ranked issues related to climate and the environment as important suggests more marketers than not are perceiving or experiencing direct threats to their operations as a consequence of environmental action.

‘We are all on this boat’

That’s not to say outlooks on the industry’s future are gloomy. The majority of respondents – 53 percent – believe the industry is headed in the right direction to ensure propane remains a viable energy source for the future.

That positivity shows in marketers’ willingness to use propane’s new environmental messaging and brand. The majority – 54 percent – say they plan to incorporate the new identity into their operations.

Source: LP Gas 2021 State of the Industry Survey

Source: LP Gas 2021 State of the Industry survey

They’re communicating that identity to their business networks and incorporating it into mailings, marketing, advertisements, websites and social media.

For some, the messaging campaign makes marketing sense: Propane is a clean fuel, so why not play to its strengths in an operating environment that increasingly prioritizes sustainability? For example, an Ohio marketer indicates that all company messaging will move to the new branding because it appeals to the company’s base.

Others are adopting the identity to support a unified front.

“We are all on this boat,” says one multi-state independent based in the South. “Propane is our industry.”

Still, a noteworthy number of respondents express uncertainty at this stage – 36 percent are not sure they will use the new messaging or brand.

Many of these respondents say they need to learn more about the concepts and see more evidence that the campaign is effective before committing time and resources.

An Illinois-based marketer who considers environmental issues unimportant compared to rising costs and supply chain stability, and is not sure about using the new identity, says: “In current times, it’s a hard sell to pay more for the better of the environment.”

This year, propane marketers have balanced the industry’s renewed focus on environmental issues with other pressing concerns such as a widespread labor shortage. (Photo courtesy of FerrellGas)

This year, propane marketers have balanced the industry’s renewed focus on environmental issues with other pressing concerns such as a widespread labor shortage. (Photo courtesy of Ferrellgas)

The marketer goes on to say the campaign may be beneficial in states that are experiencing the greatest threats from electrification, like California, but doubts its efficacy in the Midwest.

Only 10 percent of respondents say they will not use the new identity, but they raise concerns similar to those who are uncertain about the messaging and brand. These marketers resist the use of limited time and resources on priorities they don’t think will improve their businesses. One marketer in this group suggests using more resources toward energy-efficiency comparisons and rebates instead to reach consumers.

Those uncertain about the brand and messaging campaign may find answers to their questions in the coming months. At its fall meeting, PERC said it is measuring the efficacy of the campaign and will adjust its approach as needed. A docket with a plan for March through December 2022 will be presented at PERC’s February 2022 meeting.

“Let’s get the campaign out and get the metrics,” said PERC President and CEO Tucker Perkins at the fall meeting. “We’re trying to find the secret sauce that gives us the best return for our buck.”

Source: LP Gas 2021 State of the Industry Survey

Source: LP Gas 2021 State of the Industry survey

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