Winter wonderland

March 1, 2006 By    

It’s winters like this past one that drive independent propane marketers into an early retirement.

Record-high gas prices, the tease of a cold November and December followed by a record-warm January test the fortitude of the most dedicated marketers, leaving most pinched for cash to carry the remainder of the year. Again.

Marketers who rely almost exclusively on home heating have been boxed into this same corner for years. And the problem reaches beyond the dearth of cold weather.

 Patrick Hyland
Patrick Hyland

The residential market accounts for half of all U.S. odorized propane sales. Even though the industry’s national advertising campaign is growing the number of homes we reach, there are red flags for marketers who don’t balance their customer base.

Until the ad campaign hit stride, propane’s market share of new homes had been dropping in space heating, water heating and cooking applications. Our space heating market share fell from 9.7 percent in 1999 to 7.5 percent in 2003.

While we seem to have turned that around with growth through 2005, we are still losing ground to electricity in the Southeast and to natural gas in the Midwest.

Also, growth in residential customers is being offset by dramatically improved energy efficiencies in home building and appliances that reduce the volume of fuel customers need to do the job.

Given these trends, propane marketers desperately need to find growth in off-season loads. Recent developments in the forklift, light-duty pickup truck and commercial lawn mower segments offer significant hope for exactly that.

This spring’s arrival of a name-brand, propane commercial rider mower should deliver traction into that environmentally sensitive target market. Dixie Chopper is an established nameplate in landscaping circles, lending its reputation for high quality, reliability and service to professional landscapers and service crews most likely to use the equipment.

Ditto for PERC’s February decision to invest over $1 million in a Ford-Roush Industries partnership to produce a propane-dedicated Ford F-150 pickup truck in 2007. Unlike the bi-fuel version that flopped in 2003, this OEM product offers a nationwide service network, meets 2007 EPA emissions standards and qualifies for substantial federal tax incentives.

The Industrial Truck Association says internal combustion engine forklift sales in 2005 rose to 83,725 from the 74,228 trucks sold in 2004. That’s a 12.8 percent growth for propane vehicles, assuming our fuel accounts for 80 percent of IC sales. It marks the third consecutive year that propane forklifts have seen double-digit growth.

Progress on those three fronts means propane sales opportunities – even if Mother Nature refuses to cooperate.

Comments are currently closed.