Propane market outlook: positive with challenges

Lower propane prices, a stronger economy, growth in the housing sector and new applications and engines available to the market make the propane industry a good place for retailers to grow their businesses.

Mike Sloan, principal at ICF, delivered the mostly positive outlook for propane during a session at the Southeastern Convention & International Propane Expo in Nashville, Tennessee.

“There are real opportunities to grow the market and generate profitable businesses,” Sloan says. “Doing that is not always simple and traditional. New approaches need to be considered and new markets thought about. In all of those, focusing on consumer education and marketing is critically important to the overall health of the propane industry.”

The internal combustion engine market, including on- and off-road applications, continues to be the largest growth opportunity for propane, Sloan says. He cites school buses and other fleet vehicles running on propane autogas, as well as propane lawn mowers, as applications that will help fuel the growth. Meanwhile, Sloan expects residential demand to remain flat or even decline slightly due to improvements in equipment efficiencies.

While the propane industry focuses on its growth opportunities, it must protect against competing energy threats. The largest threat comes from electricity, Sloan says, with consumers in certain markets switching their heating systems to electric heat pumps. He also warns against growing regional efforts to address carbon emissions standards, which will begin to impact the industry in some markets.

“This will be an issue that everyone in the industry is going to have to address, even in states that aren’t currently thinking about this, over the next five to eight years,” Sloan says.