In the Know is a monthly partnership between LP Gas magazine and Propane Resources. Our focus this month is on propane autogas, addressed by supply and risk management experts Jim Miller, Obie Dixon and Marty Lerum.
Q. Is the propane autogas market the answer to revive our industry and grow off-season demand or is there too much skepticism about the market?
A. Over the past 40 years, the retail propane industry has had a roller coaster love affair with motor fuel. Can autogas be the answer to reviving our industry? It may not be the answer, but it could be a big part of the solution.
Everyone within the propane industry knows the positives about autogas from the consumer’s perspective – environment, supply and cost. The problem is the consumer doesn’t understand propane, and retail companies don’t know how to communicate a propane solution.
Let’s look at it from the propane marketer’s prospective.
■ Autogas is not seasonal; it’s year-round. The fact of the matter: Summer, our off-season, is peak season for driving, which means peak season for autogas.
■ Traditional heat-source demand is shrinking with technology.
■ A fleet of 50 or more vehicles could mean an additional 70,000 to 300,000 gallons per year. Yes, the difference could be that big depending on the type of fleet.
As you can see, it wouldn’t take too many fleets to grow a propane retailer’s demand 30 percent annually.
Why will propane grow as a motor fuel this time?
■ The U.S. now exports 120 million barrels of propane instead of importing 30 million barrels. Supply will not be a problem for years to come.
■ Propane is an environmentally friendly fuel, so there will be government money available to lower the entry cost to the consumer.
■ Propane should be at a lower cost to gasoline and diesel fuel until propane exports dry up.
■ Propane motor fuel sales will bring a higher net back than exports or petrochemicals.
There’s always going to be skeptics in the marketplace. This skepticism comes from both inside and outside the propane industry.
Be part of the transition from the traditional propane marketer of the past and find a propane solution to motor fuel sales in your geography. Every retailer will have his or her own propane solution. Make sure your solution is well defined and communicated to the customer.
Jim Miller, Obie Dixon and Marty Lerum are supply and risk management experts for Propane Resources. Contact the company’s office at 888-739-6732.