Fuel Oil & LP Gas Dealers

Industry Profile Report

Dive Deep into the industry with a 25+ page industry report (pdf format) including the following chapters

Industry Overview Industry Structure, How Firms Opertate, Industry Trends, Credit Underwriting & Risks, and Industry Forecast.

Call Preparation Quarterly Insight, Call Prep Questions, Industry Terms, and Weblinks.

Financial Insights Working Capital, Capital Financing, Business Valuation, and Financial Benchmarks.

Industry Profile Excerpts

Industry Overview

The 4,500 fuel dealers in the US generate revenue by selling heating fuels, such as LP gas, fuel oil, or kerosene, to a variety of customers, including residential, commercial, and industrial accounts. Other sources of revenue include lease or rental of LP gas storage tanks and related services. Companies may also sell, install, and service appliances and heating/AC systems. Some large companies operate LP tank or cylinder exchange programs.

Seasonal Sales And The Weather

Industry sales are seasonal, and peak during the “winter heating season”, which runs from approximately November through March.

Declining Demand

Demand for LP gas and fuel oil is declining, with revenue fluctuations driven primarily by pricing changes and weather conditions.

Industry size & Structure

The average fuel oil or LP gas dealer operates out of a single location, employs 15-16 workers, and generates about $5-6 million annually.

    • The fuel oil and LP gas dealer industry consists of over 4,500 companies that employ about 70,900 workers and generate about $24 billion annually.
    • The industry is somewhat concentrated at the top; the top 50 firms account for 43% of industry sales.
    • Large companies include Amerigas Partners, Ferrellgas Partners, and Star Group.
    • To lower the cost of providing service, most small companies operate locally. Some small companies are family-run and passed down through generations.
                                  Industry Forecast
                                  Fuel Oil & LP Gas Dealers Industry Growth
                                  Source: Vertical IQ and Inforum

                                  Coronavirus Update

                                  May 6, 2022 - Peak Grilling Season
                                  • Propane sales are poised to rise with the arrival of the peak summer grilling season. Fueled by the pandemic-induced trend for more at-home cooking, spending across the grilling segment rose during the first half of 2021 and the already extended grilling season continued through the year. The grilling industry’s revenue grew 14%, reaching $6.1 billion in sales in 2021, according to Retail Tracking Service data from The NPD Group. Among grill owners, an estimated 61% have a grill that’s fueled by propane gas, according to the Hearth, Patio & Barbecue Association (HPBA), which found that backyard cooks are not only finding new occasions to grill, but new months of the year to fire up their barbecues. Year-round grilling is highly popular, with 75% of owners grilling in the winter, a HPBA survey found.
                                  • Ethane consumption is projected to outpace growth in all other US petroleum product consumption through 2023, according to the US Energy Information Administration (EIA). Ethane use in the US has increased every year since 2010 and the nation now consumes more ethane than either jet fuel or propane. Consumption of ethane, estimated using product supplied, grew by 50,000 barrels per day (b/d) in 2021, according to petroleum supply data from March 2022. The EIA March 2022 Short-Term Energy Outlook forecasts that by 2023, US consumption of ethane will grow by another 340,000 b/d. Ethane mainly serves as a petrochemical feedstock to produce ethylene, which is used to make plastics and resins.
                                  • As a result of winter storms hitting Texas in recent years and leaving much of the state without electricity, property owners and businesses are purchasing propane generators to stave off future outages. A recent survey of 4,000 Texans revealed that 23% bought a generator in the past two years and another 54% are considering the purchase. Greater per capita ownership of generators will drive emergency demand for propane when power grids are out, whether from winter storms, tornadoes, or hurricanes.
                                  • Supply chain issues are causing a shortage of propane tanks. Difficulty in securing steel, brass, copper, gauges, valves, and paint have delayed the production of tank-related components and subsequently, tanks. There is also a shortage of manufacturing workers and installation personnel. The shortages have induced price volatility, according to Jeff Vandemark, president of Industrial Propane Service. “Incredible demands on propane tank production” have resulted in lead times averaging 23 weeks for tanks of all sizes, according to the National Propane Gas Association.
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