Tank issues will test marketers this winter

December 2, 2021 By    

Adversity has a way of separating the strong from the weak, creating a survival-of-the-fittest environment. The propane industry is no different.

Today’s new season of adversities is creating this separation. Tanks are a factor because of their significant supply disruption and 30-plus percent price increase this year, with no end in sight. These challenges with tanks will hurt every propane marketer. However, the strong marketer who is well capitalized, follows effective tank supply planning and manages installed tanks will see separation from the rest.

Today’s challenges with tanks reinforce the timeless sound practices followed by the strong propane marketer. Namely, these marketers:

  1. Are sufficiently capitalized to purchase tanks needed to meet their growth opportunities while creating an image of readiness with the customer.
  2. Properly plan tank supplies to ensure there are sufficient tanks in their yard that are purged, decaled and organized. These marketers also ensure their bulk plants are large enough to accommodate their tank inventory. Overcrowded facilities are unsightly, unprofessional and create challenges for the employees to navigate.
  3. Manage each installed tank as an investment, ensuring the gallon throughput and income is sufficient to yield an acceptable financial return. Idle tanks are identified and picked up as a normal course of business.

The propane marketer caught flat-footed will pay a price. Lost growth opportunities and a marred image are likely. The marketer will have to scramble to pick up idle tanks, which likely require paint, cleaning and maintenance.

For the undercapitalized marketer, this trying time with tanks could be another reason to sell the business. The issues with tanks combined with all of the other headwinds are not expected to relax in the foreseeable future.

For the strong propane marketer, enjoy your competitive advantage from having tanks when others do not. You should be rewarded for your discipline.

Marketers should remember what philosopher Friedrich Nietzsche wrote: “What does not kill me makes be stronger.” After the dust settles from the tank challenges, we should be a stronger industry.

Randy Doyle is a 40-year industry veteran who serves on the NPGA board of directors and is active in the Virginia Propane Gas Association. He is a past PERC councilor. He consults with Holtzman Propane in Mt. Jackson, Virginia.

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