Opportunities for propane lie beyond the obstacles, new energy dynamics

November 1, 2012 By    

Propane industry leaders stared down their energy future during fall meetings last month in Colorado Springs, Colo.

And while the view might not be quite as clear as the southern Rocky Mountains dominating in the distance, with gallon sales having fallen 24 percent between 2000-10, the industry is setting forth ideas that it hopes will make propane a viable energy source for years to come.

The propane industry is changing – from our increasing domestic supply sources, to our shifting core markets, to our competing energy threats – and so we must change with it.

To that point, the National Propane Gas Association (NPGA) and the Propane Education & Research Council (PERC) introduced respective growth plans to members and meeting attendees out west. For NPGA, it’s Vision 2014. PERC offered its 2013-15 Strategic Plan.

“We can’t do the same things every day and expect a different result,” says Ray Murray, NPGA chairman, of Ray Murray Inc. “We’re trying to break the cycle [of decline].”

We focused on Vision 2014 in this column in July. But a quick refresher: It is NPGA’s attempt to return the industry to growth through a four-pronged strategy involving communications, outside lobbyists, agency outreach and analytics. The desired end result is parity with natural gas; legislation that promotes propane industry growth; a reduction in expenses from government policies; and a greater awareness of propane among policymakers.

However, these initiatives don’t come without a price to the industry, totaling more than $700,000. That proposed amount brought discussion, but no real dissension, during NPGA’s marketers and state/district directors meeting in Colorado. Members will see another level of investment next fall to help fund the plan, association officials say. This is on top of a 3 percent dues increase already approved for 2013.

With NPGA membership declining since 2008, this seems like a difficult proposition. On the other hand, how big is the risk of doing nothing?

“Clearly what we’re seeing is the people active in our association understand that we have to get on a path to growth,” NPGA President and CEO Rick Roldan says.

Following their discussion, marketers gave NPGA leadership the go-ahead to move forward with the plan. A final proposal will be prepared for the full board to consider at its winter meeting in Charleston, S.C.

“Our future is something all of us are aware of; this is not your grandfather’s business anymore,” says Charlie Ory, NPGA treasurer, of Aero Propane Gas. “Without the impact of NPGA, many of us would be facing much higher added costs. This investment is to save us money in the long run.”

On the PERC side
Meanwhile, PERC is gauging the industry’s prospects for gallon growth in residential and commercial, engine fuel and agricultural markets through its 2013-15 Strategic Plan. For the three-year planning period, PERC is projecting incremental propane sales totaling about 379 million gallons, with about 47 percent of that growth from engine fuel programs.

With the down economy, competing energies and better technologies threatening propane’s traditional markets, and with propane holding a competitive economic edge over gasoline and diesel, PERC leaders are placing a greater emphasis on on-road vehicles, commercial mowers and other engines to grow gallons. This is also reflected in its recently approved $36 million budget.

“The plan is intended to maximize the potential in new markets and minimize the competitive threat in traditional markets,” says Mike Sloan of ICF International, which prepared the data for PERC.

Worth repeating
• The NPGA-sponsored liability insurance program has hit a roadblock. AIX Specialty, underwriter for program partner Lockton Affinity, was shaken with two large claims, says Blossman Gas CFO Randy Doyle, of the Member Services Committee. Roldan told us discussions are under way with another underwriter. Also, NPGA has severed ties with health insurance program partner Association Health Programs.

• NPGA leaders say they recently held productive discussions with the U.S. Department of Commerce over the restriction on PERC’s consumer education activities. Echoed in Colorado was the sentiment that the industry must be prepared to move quickly and intelligently should the restriction be lifted.

• Blossman Gas President Stuart Weidie is good at providing positive perspective for propane marketers, like when he says, “How do we swing above our weight? You have to be in there swinging if you have a chance at winning. Get in the game, foster relationships and educate.”

About the Author:

Brian Richesson is the editor in chief of LP Gas Magazine. Contact him at brichesson@northcoastmedia.net or 216-706-3748.

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