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
                                  Source: Vertical IQ and Inforum

                                  Recent Developments

                                  Nov 10, 2022 - Looming Winter Heating Crisis
                                  • The Northeast may be facing a winter heating crisis with stockpiles of diesel and heating oil (the same product but taxed differently) at a third of normal levels and natural gas inventories also below average, Bloomberg News reported in November. While the Northeast has faced high heating oil prices and tight supplies in the past, the disruption to the global energy supply triggered by the war in Ukraine means this winter the region will be competing with markets in Europe for fuel to stay warm. Bloomberg reported that heating oil delivered to New York is the priciest it's ever been and that retailers in Connecticut are rationing the fuel to prevent panic buying. A typical family in the Northeast is expected to pay $1,094 to keep warm with natural gas this winter, 23% more than last year, according to the Energy Information Administration.
                                  • The return of La Niña this winter will drive warmer-than-average temperatures for the Southwest and along the Gulf Coast and eastern seaboard, according to National Oceanic and Atmospheric Administration’s (NOAA) US Winter Outlook. Starting in December 2022 through February 2023, NOAA is predicting below normal temperatures from the Pacific Northwest eastward to the western Great Lakes and the Alaska Panhandle.
                                  • In a move expected to trigger a surge in oil prices, the OPEC+ energy cartel in October 2022 agreed to its first large production cut in more than two years. The cut of two million barrels a day represents about 2% of global oil production. OPEC+, led by Saudi Arabia and Russia, said it was acting amid signs of a downturn in the world economy that might cause demand for oil to weaken and prices to fall. The price of Brent crude, the international benchmark, which had eased during the summer months, rose more than 1.5% after the meeting, extending the recent gains and bringing prices back to levels last seen in mid-September, The New York Times reported. The average price of gasoline in the United States has begun to rise again, tracking the price of oil.
                                  • A shortage of truck drivers amid strong demand for freight drove up wages in 2021, with average compensation approaching $70,000, according to the American Trucking Associations’ annual survey. Tractor trailer drivers were among those paid about $69,700 last year, up 11% from the previous year, as companies boosted wages, bonuses and benefits to attract drivers. The rise in truck-driver pay is triggering higher transportation costs for companies as truckers seek to pass along their higher expenses, contributing to inflation across the US economy that is running near a four-decade high, The Wall Street Journal reported in August. Truck drivers are key employees of fuel oil and LP gas distributors as they make deliveries to customers.
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