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 4,175 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 17 workers, and generates about $9-10 million annually.

    • The fuel oil and LP gas dealer industry consists of 4,175 companies that employ about 71,700 workers and generate about $40 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

                                  Jun 23, 2024 - Sales Fall as Temperatures Rise
                                  • Sales for fuel dealers, which are highly seasonal, tumbled 18.9% in March compared to a year ago and 22.1% from February, as temperatures in cold-weather states rose, according to the latest US Bureau of Labor Statistics data. Meanwhile, employment by fuel dealers fell 0.7% in April year over year, while average industry wages dipped 0.3% over the same period to $27.04 per hour, BLS data show.
                                  • As operations at fuel delivery companies become increasingly connected, cybersecurity has become a rising concern for fuel dealers, LP Gas magazine reports. A survey of 127 fuel delivery companies found that hacks and breaches, ransomware, viruses, and security are their biggest concerns. To protect themselves and their customers, companies are investing in tools and strategies to protect data, including password protection, firewalls, two-factor authentication, cybersecurity training, and disk encryption, according to the Cargas 2024 Top Technology Trends in Fuel Delivery Benchmarking Report. To manage their cybersecurity needs, almost half of respondents to the Cargas survey reported relying on a combination of internal and external IT resources, while about a third relied on an in-house IT person/team. A minority said they had no dedicated cybersecurity resources.
                                  • 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 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.
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