Opportunities to explore in the propane industry

Photo: iStock.com/dr911

Time flies in the publishing business. We’re often working a month ahead and planning propane industry topics most relevant to our readers two to three months out.

You, too, might agree for your own reasons and business interests that 2015 has come and gone in a blink of an eye. So here we are, at the end of another year, wondering where it went and what it meant.

And as we reflect on the last 12 months and gauge the state of our propane industry, one word comes to mind: opportunity.

It’s a topic we explore in this year-end issue because it’s a sentiment we’ve heard from the front lines. Some propane retailers say the current fundamentals of our industry – record inventories and low supply prices – provide a path to better business operations and profits. Combine these fundamentals with a chance for aggressive marketers to pursue new demand areas of the industry, and one can’t help but see bright days ahead.

Of course, challenges – like natural gas expansion into propane territories – remain. We address those, as well, in our annual State of the Industry report.

The road to opportunity

Opportunity is the theme that comes to mind as I reflect on a November trip to Florida for the Propane Education & Research Council (PERC) meeting.

Even before I arrived at the host hotel for the meeting, my cab driver from Haiti reminisced about his journey to the United States. He says coming to America was his only chance to make a decent living because here, in the land of the free, anything is possible. Many U.S. residents take their freedom and an ability to pursue their dreams for granted, he says. Another cab driver expressed the same sentiment to me during a ride earlier this year.

Soon after the PERC meeting began, council member Bruce Leonard of Targa Resources stayed on theme by saying, “We have a tremendous opportunity before us.” He had been speaking about increased propane production, ample supply and U.S. exports. He told the council never to think of the U.S. propane supply picture as a limitation in its push to grow the industry.

“We need to think bigger, about the opportunity and what the increase of production and supply means to us and how we can take advantage of that in the future,” he says.

The word “opportunity” was batted around often in a renewed council discussion about water heaters. There’s a growing sentiment among council members that PERC should do more – perhaps in addition to its “Pull the Plug on Electric Water Heaters” campaign – to target the millions of homes heating with propane but not having a propane water heater.

“If you want to grow the residential business, we need to take advantage of the opportunities that are out there,” says council member Doug Rinke, noting how the propane infrastructure is already in place at these customers’ homes.

Tucker Perkins, the council’s chief business development officer, counters that PERC is unified in its strategy to “pull the plug” on electric water heaters.

We also end the year with another opportunity on the horizon, in the form of a new consumer education campaign under development at PERC. Some in the industry think the council should have responded more quickly upon its release from a federal government restriction, allowing it to relaunch such a campaign. Steps are being taken to hire a new ad agency that will help develop the program and launch it in April – about one year after PERC learned it was no longer restricted. In past years, this multimillion-dollar effort has allowed the industry to educate millions of Americans about propane’s benefits and grow gallons in the process.

This all comes at a favorable time for consumer propane sales, with high supply and low prices increasing growth prospects in long-struggling traditional markets, according to energy firm ICF International. The new housing market is looking up, and engine fuel demand is expected to help recapture lost propane gallons over time.
All reasons for optimism heading into the new year.