The 2024 State of the Propane Market

Industry leaders gauge propane’s placement in the clean energy movement, their biggest concerns for 2024 & what they’re most excited to see in the new year

Strategy BPN Staff

It’s hard to believe a new year is upon us, and yet here we are opening 2024 following a year of headlines covering things like inflation, the workforce crisis and the world’s collective dive into the arena of artificial intelligence (AI). Among these hot topics is the propane industry’s continued drive to claim its place as a clean, alternative fuel for the future — one that isn’t edged out by the “electrify everything” movement as it fights for energy choice rights for consumers.

How does the industry gauge its progress in the clean energy movement? What trends are the most exciting — or most concerning — for propane marketers as we head into 2024? What are the most important things for marketers to be thinking about in the new year?

To answer these questions, BPN surveyed marketers, solutions providers and associations for their perspectives on the current state of the propane industry and what might be coming down the pipeline in the new year. Ahead, gain insights on propane’s position in the political and energy solutions landscape from the following industry leaders:

And don’t miss questions 6 and 7 for exclusive insights into 2023 and 2024 not seen in print!

1. How would you gauge propane’s progress and place in the clean energy movement at the top of 2024?

Anderson: We still have a mountain to climb, but the good news is [that] we have finally started the hike. The National Propane Gas Association (NPGA), Propane Education & Research Council (PERC) and many states are making environmental talking points top priority when it comes to increasing gallons.

Kazakewich: I think we all need to accept that the definition of clean energy is sort of shifting; it not only means low overall environmental impact during storage, transportation and use, but now includes renewability as a key component.

Kenney: I believe that propane has made considerable progress as a leader in the ‘immediate solution’ for energy cleanup efforts with the emergence and feasibility of renewable propane. It is the … most economically feasible solution toward lowering carbon intensity that currently exists, as it does not require infrastructure changes or any large system overhauls. It can be dropped into our current energy supply mix and perform admirably.

Markley: Propane autogas has a significant seat at the clean energy table due to its success in various fleet types around the country. In addition to autogas, propane has become a fuel of choice for e-commerce warehouses. Due to the rise in e-commerce, there is a greater need for warehouse facilities, many of which are located in rural areas to bridge the gap between larger cities, and therefore do not have access to natural gas. In this case, propane’s vast infrastructure answers a need for both heat and power for these locations. This has made propane a relevant player in industrial energy.

Montroy: Our progress is slow but steady. It is important to maintain the momentum by making sure we all talk to our family, friends and neighbors about propane’s usefulness in combating climate change.

Mouw: The industry is in a great position. We have a changing regulatory landscape that will drive fleets away from diesel to either propane or electric options, and in all honesty the EV options in medium-duty truck and bus are not mature enough, so we should gather significant market share. With all those tailwinds, we really need to stay connected as an industry and ensure our ‘elevator pitch’ to fleets and governmental influencers and decision-makers is dialed in.

Weidie: The joint effort between NPGA and PERC to rebrand our energy source as affordable, accessible and good for the environment is now entering its second full year. PERC is utilizing multiple methods to communicate with consumers and key influencers, and I believe we will continue to see success.

Zuppas: In early November, the North American Electric Reliability Corp announced that nearly two-thirds of North America could face power shortages again this winter. It’s a staggering statistic that helps more and more consumers quickly understand the need for multiple paths toward a lower-carbon future. As we … enter calendar year 2024, propane carries the message of being a ‘here and now’ way to reduce carbon and can speak to the future with multiple sources for renewable propane coming online.

2. What industry trends are you seeing as we go into 2024?

Anderson: Renewable propane is taking off at a faster pace than many of us would have envisioned. In New England, five of our states have had renewable propane debuts, and we are seeing renewable propane being used for home heating, agriculture and backup power for the first time in America. Our member companies and our employees are so interested in renewable propane and how it can be made — it is a very exciting time for our industry. Even though we don’t have great quantities of it available today, more is coming. … Most importantly we now have a path to zero that lets us meet future state climate goals. Propane is here to stay, and including small volumes of renewable propane blends educates our future customers and our policymakers about our clean energy.

Cargas: From a technology perspective, the industry is expanding. Fuel dealers are investing in more tools than ever to manage every area of business, from delivery [and] route optimization to sales, marketing and customer service. We’ve seen fuel dealers explore new technology like AI and we’ve noticed that energy companies are increasing investments in tank monitors, sales software and marketing automation tools.

Humphrey: Technological advancements and adoption are on the rise. This will be critical as we face regulatory developments, shifts toward electrification and potential economic challenges ahead.

Kazakewich: The trend of a turbo-charged regulatory environment will probably accelerate, which is the bad news. The trend of prioritization of safety and super-efficient business practices in the propane industry will also accelerate, which is the good news.

Markley: As noted previously, propane has risen to the top of the industrial energy movement thanks to its immense availability, and we believe this will continue to increase in the next year. As we continue to see a decrease in brick-and-mortar shopping, the need for warehouse distribution centers continues to rise and the location of these centers is reliant on energy sources. Many of these facilities will continue to rely on propane for power. In addition, we expect autogas to continue its upward trend, thanks to its lower emissions and cost value. We also expect propane autogas to continue to compete against electric vehicles in the alternative energy space for various reasons.

Montroy: Marketers are recognizing the opportunity to establish themselves as energy providers for their customers. We’re taking the message beyond simply selling propane and instead [we’re] offering energy solutions.

Mouw: The biggest trend to our advantage is that fleets now recognize that diesel in heavy start-stop, high-idle applications in Class 4-7 will become too costly and complex and they must find an alternative. The beauty of this realization is that we have the only proven, commercially viable and scalable solution that drives significant cost reductions without compromising range, payload and performance.

Weidie: The transition to displacing diesel with propane has been slow, but the momentum is increasing. One of the key concepts behind the growth of the propane industry is to not only sell gas to burners, but also to engines. Emissions regulations in 2027 … should create many opportunities.

3. What’s on your mind/what are you most concerned about as we go into 2024?

Humphrey: I always have concerns of a 2013-2014 winter repeat. In many ways, it’s up to each individual marketer to ensure they are properly prepared.

Kazakewich: The aging of my staff and of many industry decision-makers is on my mind. Big industry acquisition moves and fast-acting, executive-order-style regulations and election year volatility are also front and center on my mind.

Knauff: I am most concerned about exaggerations and distortions that cause policymakers to threaten our product in the name of protecting the world from climate change. Climate is an extremely complicated issue, and therefore easy to distort for self-serving purposes. An unusual alignment of incentives has caused … abatement measures to be distorted by people who have money to make from ill-conceived government programs, political interests that have political and economic goals other than climate change abatement itself, and news organizations that benefit from publishing sensational stories about the weather and blaming the energy industry. This toxic combination threatens an industry (propane) that delivers real value at reasonable prices to consumers as part of the basic shelter requirement. Because these attempts to attack our industry are not based on the truth, I don’t believe they will succeed. Protect yourself and our industry by becoming well-informed on the issue. Most importantly, encourage your customers to reach out to their elected representatives to protect their right to choose. Our customers … are our most potent weapon against this disinformation campaign.

Markley: One of our main concerns has a lot to do with price increases. Year after year, the price of goods has continued to increase, which everyone has noticed. Being a manufacturing company, we are consistently looking at increases in every component we purchase for our systems, most of which is out of our control. The exponential increase continues to affect our end-user pricing and we are constantly looking at ways to offer our customers the same high-quality systems at a good value, which has become more challenging in the last three years especially.

Montroy: We need to continue the fight against local governments banning propane as a fuel choice for our customers.

Mouw: Solidarity in the propane industry. If we stay together and promote the benefits of propane vs. diesel, there will be significant growth in gallons for this industry. My math model shows that new propane medium-duty truck and school bus sales over the next five years will drive 4 billion new gallons of demand. I think about such things as the 2024 election, geo-political instability, interest rates, potential recession, etc., but those are outside of our control. If we focus on what we can control, we will thrive.

Weidie: All industries need talent. The propane industry is no different, and many of our most experienced and knowledgeable employees will be retiring in the near term. I am very excited about the progress PERC has made on the Certified Employee Training Program (CETP) education programs that have been developed in recent years and believe this will be a key factor in our industry’s health.

4. How do you expect AI to affect the industry in the next five years?

Cargas: AI is still in its infancy when it comes to fuel delivery and HVAC applications. But at the rate it’s growing, we’re bound to see more experimentation. Right now, AI helps customer service teams quickly draft customer communications, generate ideas for sales and marketing campaigns, and educate new and existing team members on energy processes. But in five years, we might see AI incorporated into demand forecasting, process optimization and financial report generation.

Humphrey: I don’t see AI having an immediate widespread impact anytime soon; however, I do see how it could be integrated into routing and delivery systems. It could also be used to create marketing content and handle customer communications for more tech-savvy marketers.

Kazakewich: AI will affect the industry because it will affect how we all interact with computers — this will be particularly obvious through our use of agent software.

Kenney: I am truly looking forward to seeing the adoption of AI in the next few years, especially [in] regard to supply planning and growth strategies. AI has the ability to map out expected demand and opportunities, which allows for users to plan required resources for inventory and asset needs for their business. If this planning can be integrated into the AI program, it could streamline the entire acquisition process for companies looking to cover their existing customers, as well as grow.

Markley: With AI contributing and expanding e-commerce opportunities, we expect to see an increase in those warehouse facilities where propane can play a key role, as noted previously. We are also looking at ways AI can be integrated in our engineering processes and advance design efficiencies in midstream, industrial and autogas markets.

Montroy: With some luck, AI can help our profitability by making the tools we use easier and more effective. Effective routing and prospecting are a couple of areas that come to mind.

Mouw: Driver and technician shortages are two of the biggest challenges in our industry, and I suspect AI will have a big influence on those by the end of the decade.

Weidie: Our company is deploying AI in multiple areas. We have found it [makes] a strong and positive impact. While the media hype associated with AI is overdone, its potential to have a positive impact on productivity should not be underestimated.

5. What else should propane marketers know about the year ahead?

Cargas: The past several years have been challenging, and recent trends like hiring struggles, industry regulation and proliferation of new technologies have left fuel dealers uncertain of what lies ahead. But one thing remains a constant: customers need our energy companies. Customers rely on fuel delivery and HVAC service to help them live comfortably, and that dependence isn’t changing anytime soon. Whether you’re scared that AI will cannibalize jobs or concerned that the industry’s sphere of influence is shrinking, trust that no technology can replace the ingenuity and motivation of humans.

Humphrey: My recommendation to marketers is always to develop strategies for supply chain resilience and maintain autonomy. Diversify your market, keep a close eye on energy transition policies in your state, and most importantly, integrate technology into your business. As new technologies emerge this year, there are opportunities to leverage extremely helpful tools to better navigate the challenges ahead.

Kazakewich: It looks like most of the supply chain kinks are out. Thank God that ride is over.

Kenney: No matter what, always keep your eyes looking forward and planning ahead. I believe we are entering a period of solid growth in our industry after the pandemic and there will be ample opportunity to gain new customers. Keep them happy and make sure you are ready to take on the extra gallons, ensuring supply of propane and equipment. It’s never too early.

Montroy: Customers’ attitudes are changing. Many are looking for energy solutions they can feel good about. Propane provides that. Now we have to make sure everyone knows it.

Markley: We would encourage propane marketers to look outside of the typical markets for propane for gallon growth opportunities. While some of the markets may be more challenging to enter, we are seeing marketers of all sizes find new gallons in industrial and autogas markets that are increasing across the country.

6. Exclusive! What are some of the most significant wins the propane industry has achieved — whether on a regional, national or global level — over the past year?

Anderson: Defeating bills that would require all new construction to be electric-only for heating in New England and including propane in the Massachusetts stretch energy net zero codes.

Kazakewich: The regional, national and global propane industries are incredibly different markets, but they all have the promotion and acceptance of autogas and the still-developing renewables discussion as common ground.

Kenney: I think one of the most significant wins was the overturning of the Berkeley gas ban. Not only was it a major victory for our industry, but it will also serve as precedent for future battles against bans.

Markley: One win for the propane industry over the past year has been autogas remaining a very relevant alternative fuel, especially in regards to competing with electric vehicles. Actually, it has not just remained relevant but has grown in several ways, notably the market outside of school buses. We saw a large increase in fleet users, such as the contractors for the United States Postal Service, across the country. And school bus fleets have continued to add … propane autogas buses for their fleets, many of which have tested other alternative fuel buses and come back to propane.

Montroy: The Ninth Circuit Court of Appeals ruling to overturn a ban on gas connections can help us on multiple fronts. It’s a strong precedent as we fight similar battles in other jurisdictions. It also creates conversations that give opportunities to explain the immediate benefits of propane in decarbonization efforts.

Weidie: The propane industry appears to have galvanized around renewable liquid fuels and more specifically, renewable propane. [Renewable propane] has the potential to position our industry for significant growth, as it has low carbon intensity and the feedstocks utilized in the production of [renewable propane] are generally waste products. We can turn something not productive, such as landfill waste, into a great energy source — propane.

Zuppas: The National Propane Gas Association’s (NPGA) state and municipal advocacy team helped deliver a number of key victories this past year by working with lawmakers to counteract aggressive electrification efforts through the introduction of energy choice legislation. Bottom line: Consumers want and deserve to choose the types of appliances in their home. Energy choice legislation has helped protect that important right. On a global level, Ferrellgas continues to admire and support the World LPG Association’s (WLPGA) Cooking for Life campaign, which seeks to transition 1 billion people from cooking with fuels like kerosene, wood and dung to clean-burning propane by the year 2030. As we continue to promote propane’s clean-burning attributes here in the U.S., this is a fantastic example to point to that demonstrates the profound impact propane can have around the world.

7. Exclusive! What are you most looking forward to in 2024?

Anderson: More members highlighting and advertising propane as ‘energy for everyone.’ I would like to see renewable propane logos on every bobtail and every 20-pound tank in New England, educating consumers about renewable propane blends and how our energy is here to stay.

Kazakewich: Falling inflation and interest rates — fingers crossed.

Markley: We are looking forward to increased opportunities for propane in 2024 and are anticipating the opening of two propane terminals we are in the process of constructing in Oklahoma and Arkansas.

Montroy: 2024 will be a big year for educating our customers as well as the general public about the benefits of propane.

Weidie: Our industry has many opportunities, despite the strong but misguided movement to ‘electrify everything.’ One-energy solutions won’t work in the transportation sector, just as a heat pump will not provide adequate heat in Maine or Wisconsin. We have to continually advocate for our energy source and never apologize for it. It is clean, accessible and affordable — all three are great attributes.

Zuppas: Ferrellgas is looking forward to continued engagement and collaboration with the WLPGA, NPGA, PERC, and state and regional associations to continue to grow propane’s uses and users and to continue to bring all of propane’s benefits to the national and world energy conversation. We’ve accomplished so many amazing things together as an industry in 2023, and we look forward to doing even more in 2024.

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