California on top again for propane sales

Call it a California three-peat.

The Golden State outlasted Michigan for a third straight year to retain the top spot in the United States for the most retail propane gallon sales.

The latest sales duel wasn’t as close as the previous year when California prevailed by 8 million gallons. This time, the final tally, in millions of gallons, was 535 to 491.

There’s only one place we can glean results like this – the Annual Retail Propane Sales Report, which Frost & Sullivan prepared for the Propane Education & Research Council (PERC) through surveys of U.S. propane retailers. Each year, we enjoy the process of reviewing the data and extracting the facts, figures and trends that you might find interesting and relevant to your business.

PERC, meanwhile, is required to gather such data so it can calculate the amount of assessment collections from the industry to rebate back to the states.

The latest report of U.S. odorized propane sales by state and end-use sector, released in September, covers 2023. Here are our takeaways:

The top 10: California and Michigan get all the attention atop the statewide gallon sales comparisons, but here are the top 10 gallon sellers by state. They all appeared in the 2022 top 10 as well, with Minnesota holding onto No. 3.

• California – 535 million gallons
• Michigan – 491
• Minnesota – 450
• Illinois – 434
• Texas – 414
• Wisconsin – 402
• New York – 401
• Iowa – 380
• North Carolina – 352
• Ohio – 344

Market leaders: Michigan dominated propane sales in the residential market (349 million gallons in 2023), while California led the commercial market (159 million). It was no surprise to see Iowa atop agricultural sector sales (102 million), while Texas swept the internal combustion engine, industrial and cylinder markets with 80 million, 41 million and 38 million, respectively.

Overall sales in 2023: The state-by-state breakdown offers its own intrigue, but the main data point in each report is the overall gallon sales figure because it helps establish trends in the industry. In 2023, U.S. propane retailers sold a combined 8.995 billion gallons, an 8.6 percent decline from 2022 sales but still near the 10-year average of 9.04 billion gallons. The total marks the first step back in gallon sales since the pandemic year of 2020. The report cites the drop in sales as part of “a broader trend of fluctuating primary energy consumption in the U.S.”

Regional comparison and weather impacts: Propane sales decreased in all four U.S. regions, a result of milder weather conditions. Weather is a primary driver of propane gallon sales, and the 2023 report reveals just how mild conditions were for the year. There were about 4 percent fewer heating-degree days compared to the 10-year average; 11 states experienced their warmest or second-warmest years on record, and 24 others recorded their top 10 warmest years.

Threat to business: If mild temperatures weren’t enough to bear, the sales report details the growing popularity of heat pumps and their impact on propane demand. Heat pump sales hit a record 4.3 million units in 2022, exceeding gas furnace sales for the first time. Heat pumps now account for 55 percent of heating system sales. A positive here: The industry has been pushing a Heat Pump Helper hydronic heating product that uses propane as a backup to the inefficient electric heat strip.

End uses: Propane sales mainly went into the residential and commercial markets, at 54 percent and 23 percent, respectively. Agriculture (9 percent), internal combustion (8 percent) and the cylinder and industrial markets followed, each at 3 percent. Commercial market sales decreased for the second year in a row.

Welcome, renewable propane: The report added renewable propane gallon sales as a category in 2022. In 2023, propane retailers sold about 102 million gallons of renewable propane and renewable propane blends, an increase of 52 million gallons from the previous year. This new metric highlights a changing industry.

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To view the full report, visit propane.com/providers/annual-retail-sales-report.

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