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 4,500 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
Recent Developments
Mar 15, 2023 - Bill Would Study Creation of Reserve for Propane
- A US senator has introduced a bill that would require the energy secretary to conduct a study to determine the feasibility and effectiveness of establishing a national strategic propane reserve, LPGas reported in March. The National Propane Gas Association (NPGA) worked with Sen. Debbie Stabenow, D-Mich on the proposed legislation to secure key provisions including backing the US Energy Information Administration’s (EIA) involvement with the study; considering alternatives to a national reserve; and ensuring the propane industry is engaged in the development of the study. If enacted the bill would create a propane reserve that would exist separately from the nation’s strategic petroleum reserve. The legislation is intended to protect households that heat with propane. The reserve could be tapped in emergency situations when there are supply shortages or prices so high that people cannot afford to heat their home.
- A rule proposed by the US Environmental Protection Agency to limit biodiesel blends in heating oil to no more than 20% is drawing opposition from the heating oil industry, Fuel Oil News reported in February. In comments submitted to the EPA, the National Energy & Fuels Institute (NEFI) said “The consensus is the changes proposed by the EPA will harm the ability of our industry and state governments to deliver on their environmental commitments, increase greenhouse gas emissions, and increase costs for heating oil consumers.” Specifically, NEFI is concerned about proposed changes to the Renewable Fuels Standard (RFS) that would prohibit renewable identification number credit from being ‘separated’ from gallons of diesel fuel and home-heating oil if the biodiesel blend exceeds 20% because it would discourage higher blends and make fuel dealers less competitive in a market where consumers and state and local policymakers are demanding low-carbon home energy solutions.
- Propane is the primary water heating fuel in 4.28 million housing units, accounting for 3% of the overall market, according to recent data from the US Energy Information Administration (EIA). Propane is the third most commonly used fuel for heating water after electricity and natural gas. While the number of households using fuel oil or kerosene for water heating applications fell between 2015 and 2020, the number of households using propane grew over this same time period, according to the National Propane Gas Association. The use of propane to heat water varies drastically between states and regions. In Vermont, 20% of households use propane for water heating, compared to only 1% in Florida. The top five US states for propane water heating (by housing units) are California, Texas, New York, Ohio and Michigan, according to EIA.
- Propane- and CNG-powered school buses replaced only about 5% of 2,500 existing school buses that benefited from the EPA’s Clean School Bus Program last year, LP Gas magazine reported in January. Of the more than 2,500 buses benefiting from the program, 95% (2,448) were replaced by electric buses. The funding – nearly $1 billion in 2022 rebates – allowed for just 109 propane buses and 16 fueled by compressed natural gas. In a blog post citing the cost, operational and environmental benefits of propane buses compared to electric, Todd Mouw of Roush CleanTech said the program could have placed as many as 29,000 propane school buses on the roads. The Propane Education & Research Council called the dearth of propane-powered buses "staggering” and suggested the industry reach out to stakeholders including parents to sway a school district’s bus-purchasing decisions in favor of propane.
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