California overtakes Michigan for 2021 propane gallon sales

Did you know that retail propane gallon sales trended upward in the latest analysis of the U.S. market?

The industry was trying to move past the COVID-19 pandemic in 2021 when it sold 9.54 billion gallons of odorized propane – a modest year-over-year increase from the 9.44 billion gallons sold in 2020.

Each year, we look forward to learning about propane gallon sales totals and trends, based on a long-running report prepared annually for the Propane Education & Research Council (PERC). While the report helps PERC fulfill requirements regarding state rebate allocations, it also gives the industry a look at the factors impacting retail sales.

If you haven’t read the 34-page report, compiled by Frost & Sullivan for calendar year 2021, we’ve got you covered. Here’s what stood out to us.

Total sales: While propane sales trended upward slightly in 2021 compared to 2020, the 9.54 billion gallons look even better when compared to the 10-year average of 8.9 billion. That’s a 7 percent increase. Remember, total sales topped 10 billion in 2019.

The top 10: Noteworthy here is that California broke Michigan’s three-year reign for the most retail sales by state. Here are the top 10, which accounted for 47.5 percent of total U.S. propane sales in 2021:

1. California – 546 million gallons
2. Michigan – 522
3. Illinois – 492
4. Minnesota – 484
5. Wisconsin – 452
6. Texas – 443
7. New York – 437
8. Iowa – 409
9. North Carolina – 375
10. Pennsylvania – 373

Leaders of markets: California sold the most gallons (62 million) for use in internal combustion engines; Michigan maintained its mastery of the residential market (358 million); Texas dominated the commercial market (231 million); and Iowa was in familiar territory atop agriculture sales (140 million).

The pandemic’s impact: The report refers to 2020 as “an aberration year” as the pandemic forced people to stay at home, contributing to higher propane sales in the residential sector. With the gradual lifting of restrictions in 2021 and the reopening of some offices and schools, people started to leave home again. According to the report, this recovery contributed to a decrease of 163 million gallons in the residential sector and a similar increase, of 174 million gallons, in the commercial sector. The cylinder market also experienced an uptick in sales, by 45 million gallons, driven by restaurants and hospitality industries providing greater outdoor spaces in response to the pandemic.

Bread-and-butter market: The residential sector saw the largest decline in gallon sales (from 5.087 billion in 2020 to 4.924 billion in 2021), owing to warmer-than-normal temperatures in October through December. The residential sector still accounts for 51 percent of propane sales.

Regional glance: The Midwest has the highest share of propane-heated homes in the country and is the largest consumer of propane, but it saw a decline (2.7 percent) in propane demand in 2021 due to warmer weather. Meanwhile, propane sales increased across the South, West and Northeast.

Weather disasters: Weather is a natural part of the propane industry discussion, driven by heating degree-days, but the topic took on another meaning in 2021. The report references 20 billion-dollar weather and climate disasters, including wildfires, winter storms, floods and tornadoes. These events drive up propane sales as customers use propane to heat homes and businesses, of course, but also for backup power generation. Of note in February 2021, Winter Storm Uri blanketed all 254 counties of Texas.

Odds and ends: Speaking of weather, heating degree-days in 2021 didn’t change much from 2020. Alaska led with nearly 11,000, but it sold the least amount of propane (15 million gallons), not counting the District of Columbia. North Dakota followed with just over 8,200 heating degree-days, and Hawaii, surprisingly, had 13 when it usually struggles to get more than one. 

You can download the sales report at propane.com/salesreport.

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