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 (aka propane) 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 comprises 4,175 companies that employ about 71,600 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, Star Group, and Suburban Gas Partners.
- 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
Aug 23, 2024 - Record Propane Exports
- US propane exports set an annual record high last year, averaging 1.6 million barrels per day (b/d), an increase of 14% over 2022, according to the US Energy Information Administration (EIA). Propane exports represented 26% of all US petroleum product exports, more than any other petroleum product. Exports to Asia, including Japan, South Korea, and China, rose 27% over 2022, with China accounting for the most growth, up 50% year over year. Closer to home, US exports of propane to Mexico have fallen from their peak in 2021 of 165,000 b/d to 145,000 b/d last year, a drop of 12%, according to the EIA. Mexico was the largest export market for US petroleum products in 2023. Propane is consumed globally for space heating and is increasingly used as a petrochemical feedstock in East Asia.
- Propane, a type of liquified petroleum gas, has a role to play in protecting the nation’s fragile and stressed electrical infrastructure, LPGas Magazine reported in August. “In a world where the grid is sometimes not as reliable as we would like, propane can fill a role in power generation as a clean fuel,” Chairman of the Propane Education & Research Council (PERC), Chris DeFilippo, told the magazine. PERC’s plan to increase propane’s share of the power generation market includes growing propane’s portion by 12% – or about 45 million gallons – over the next five years. According to PERC, opportunities include swapping out mobile diesel generators at events and construction sites with propane-powered generators and working with original equipment manufacturers of generator sets (portable power supply sources that consist of an engine and a generator) to provide power locally on-site and off-grid.
- 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 aims to install another 175,000 by 2027. State rebates, federal incentives, a growing number of vendors and installers, and the high cost of heating oil drive the rapid adoption.
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