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 Current Conditions, Industry Structure, How Firms Operate, Industry Trends, Credit Underwriting & Risks, and Industry Forecast.

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

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

Industry Profile Excerpts

Industry Overview

The 4,290 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 the 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.

Declining Demand

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

Seasonality and Weather

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

Industry size & Structure

The average fuel oil or LP gas dealer operates out of a single location, employs 16-17 workers, and generates about $11-12 million annually.

    • The fuel oil and LP gas dealer industry consists of 4,290 companies that employ about 71,600 workers and generate about $48.5 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

                                  Recent Developments

                                  Apr 23, 2024 - Flat Prices
                                  • Producer prices for liquified petroleum gas were essentially unchanged (up less than 1%) in March compared to a year ago after spiking nearly 50% in the previous annual comparison, according to the latest US Bureau of Labor Statistics data. Employment by fuel dealers declined by 3% in January year over year, while average wages rose less than 1% over the same period to $27.36 per hour, down from their seasonal peak in December, BLS employment data shows.
                                  • Homeowners in Maine, where the percentage of households burning home heating oil is the highest in the nation, are converting to climate-friendly heat pumps at a rapid rate, The New York Times reported in March. Heat pumps run on electricity and are the cheapest and most energy-efficient way to heat and cool homes, according to NYT. Unlike oil-burning furnaces, heat pumps don’t emit carbon that’s warming the planet making them an excellent way for homeowners to reduce their carbon footprint. In 2023, heat pumps outsold gas furnaces in the US for the second consecutive year. Last September, Maine met its goal of installing 100,000 heat pumps in households two years ahead of schedule and is aiming to install another 175,000 by 2027. The rapid adoption is being driven by state rebates, federal incentives, a growing number of vendors and installers, and the high cost of heating oil.
                                  • New England winters are getting warmer, NBC10 Boston reports. Indeed, winter is the fastest-warming season in New England, the nation’s largest market for fuel oil for heating. Since the 1970s, winter temperatures have warmed by 3.4 degrees on average, equal to an additional 15 days spent warmer-than-normal during the winter months. More broadly, according to AccuWeather meteorologists, the US experienced one of the warmest Decembers ever in 2023, with several cities breaking their records. While reduced demand for heating in homes and other buildings during warmer winters can result in lower energy consumption and costs for consumers, it spells trouble for highly seasonal heating fuel sales.
                                  • The US Department of Energy has proposed raising the minimum efficiency standards for several categories of residential gas and liquid fuel-fired boilers, the National Energy & Fuels Institute (NEFI) reports. Manufacturers criticized the proposed boiler standard, which would apply to newly manufactured boilers and take effect in five years, according to Fuel Oil News. If finalized, the proposal would raise the minimum Annual Fuel Utilization Efficiency standards to 95% for gas hot water boilers and 88% for liquid fuel hot water boilers, representing an increase from the current standards of 84% and 86%, respectively, per the NEFI. “The DOE is utilizing the Energy Policy and Conservation Act to aggressively push a political agenda,” said NEFI President and CEO Sean Cota. “The administration sees efficiency standards as a tool to push consumers towards more costly and less efficient electric heat pump systems, even if they cannot afford them,” he said.
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