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Within the Industry GROWING GALLONS WITHIN THE INDUSTRY Propane autogas is the leading alternative fuel in world — powering more than 25 million vehicles worldwide. The U.S. propane-autogas-powered vehicle market lags in acceptance with just over 200,000 vehicles. The propane industry fleet accounts for a small, but growing, percentage of the overall population. Thanks to recent improvements in propane autogas fuel system technology, a growing number of propane marketers are choosing propane autogas rather than diesel and gasoline powered engines when they specify and purchase vehicles. The original objective of this paper was to define the status of converting the propane industry’s fleet to our fuel and identify barriers that were obstructing growth in this industry and others. In this edition, we want to share an industry status update as well as recent successes in the expansion of propane autogas. Today, more marketers are choosing propane autogas for their fleets. As this report outlines, propane autogas is providing significant overall total cost-of-ownership (TCO) savings that translates into profits for all marketers regardless of fleet size. PROPANE AUTOGAS VEHICLES of the current propane vehicles requires an investment, but that Like other transportation markets, the propane industry follows investment is paying off in many ways. Pickup trucks, manager and standard practices when specifying and purchasing class 1-8 service vehicles, bobtails, and cylinder rack trucks all are available vehicles to safely transport payload, optimize vehicle performance, from multiple brands in both dedicated and bi-fuel models. These and provide the highest possible returns for their stakeholders. options provide comparable performance to conventional fuels with Propane autogas is becoming the choice for many marketer fleets a much lower TCO and much quicker ROI. when the preferred class 1-7 propane autogas vehicles meet the need for their required application. TODAY’S PROPANE AUTOGAS FLEET In some cases, especially involving class 7 and 8 vehicles, propane Propane marketers own and operate bobtails, transports, service autogas cannot always provide a viable solution. For example, with trucks, rack trucks, and other light- to medium-duty vehicles (LDV) the propane industry trending towards larger capacity (3,499–5,500 — all of which are candidates for replacement with propane-autogas- gallon) bobtails with heavier payloads, a viable propane autogas powered models or propane conversions. Based on modified 2016 option is not yet available. Outside of these exceptions, propane data prepared by ICF International, the changeover of these vehicles marketers can now purchase certified OEM and aftermarket propane offers a significant opportunity for the propane industry to increase autogas vehicle equipment that fits most applications. annual demand and will increase with each adoption. Industry fleet data reveals similarities between propane and other To calculate the 2016 load growth potential, ICF estimated the total industries. Despite recent advancements in propane autogas fuel number of vehicles owned and operated by propane marketers based system technologies, most propane marketers continue to specify on available industry data and the LP Gas “Top Retailers” survey. diesel- and gasoline-powered engines. These marketers expect Service trucks, and rack or cylinder exchange trucks, were estimated diesel-like durability for their engines and are reluctant to believe based upon industry data published by the major marketers. that propane autogas models can provide comparable performance. For LDVs, ICF assumed at least one vehicle per marketer, scaling Plus, some standard features for the propane industry — such as LDV ownership for the larger marketers based on normal business transmission, PTO, and brake options — are not available in today’s parameters. Using that total, ICF estimated average miles per class 6 and 7 propane autogas offerings. gallon and total miles driven per year to calculate the total potential Yet some marketers are successfully operating daily with the current propane consumption. For 2017, PERC updated ICF’s 2016 numbers class 1-7 options. They’re moving away from traditional thinking using the latest LP Gas Top 50 Survey Results; the table below shows for the opportunity of reduced total cost-of-ownership. In turn, the results of the analysis. that choice is increasing their gross profit margins and making them more competitive in their respective markets. Acceptance POTENTIAL PROPANE INDUSTRY DEMAND FOR PROPANE AUTOGAS IN VEHICLES OWNED BY PROPANE MARKETERS (ESTIMATED)1 Total # of Vehicles Average Miles Average Propane Average Gallons per Total Potential Propane Owned by Propane per Year MPG Vehicle Per Year Consumption (Gallons) Marketers (2017) Bobtails* 18,704 30,000 4 7,500 140,280,000 Service Trucks ** 20,651 20,000 8 2,500 51,627,500 Rack Trucks** 2,184 30,000 4 7,500 16,380,000 Other LDVs*** 9,132 30,000 11 2,727 24,905,454 Total Vehicles Owned by Propane 50,671 233,192,955 Marketers Source: ICF and LP Gas “Top 50” Survey Results (2016). *Based on LP Gas “Top 50” survey data, scaled to the full industry. ** Based on limited industry data available. *** No propane industry-specific data available. Estimated by ICF based on normal business parameters. © 2018 by the Propane Education & Research Council SERVICE TRUCKS Limited data is available on class 2-5 service trucks. PERC estimates the total population to be 20,651 based on ICF and LP Gas data. Service trucks typically are driven the least of all the vehicles — up to 20,000 miles per year. With an average propane consumption rate of eight miles per gallon, purchasing OEM or converting service trucks to run on propane represents 2,500 gallons of propane demand per service truck each year. Overall service truck conversions could total over 50 million gallons of propane demand per year for the industry. TOTAL CLASS 2-5 POPULATION BOBTAILS As the primary transport vehicle owned by propane marketers, bobtails account for the largest fleet expense: fuel. According to 20,651 the survey, the top 50 marketers own and operate a total of 8,218 bobtails. Applying this across the industry and using ICF’s 2016 ADDS UP TO estimates, PERC calculates the total bobtail population to be about 18,704. Bobtails travel up to 30,000 miles per year and have an average propane consumption rate of four miles per gallon. Each bobtail consumes approximately 7,500 gallons of propane per year. 50 MILLION In total, this translates to over 140 million gallons of increased propane demand from converting bobtails to propane internal GALLONS OF PROPANE DEMAND combustion engines. RACK TRUCKS TOTAL BOBTAIL POPULATION OF Although data on the number and usage of rack or cylinder exchange trucks is limited, PERC estimates the total to be about 2,184. Rack trucks travel on average 30,000 miles per year at four miles per gallon. Therefore, each rack truck presents over 7,500 gallons of 18,704 potential propane demand growth, which equates to just over 16 TRANSLATES TO OVER million gallons added for the whole industry. LDVS There is no available data on population or consumption estimates for LDVs in the propane industry. To estimate LDV demand growth 140 MILLION potential, ICF calculated the 2016 population based on normal GALLONS OF INCREASED PROPANE DEMAND business standards. PERC updated ICF’s estimate for 2017. This technique resulted in a total population of 9,132 vehicles. Each LDV is estimated to travel around 30,000 miles per year at an average TRANSPORTS rate of 11 miles per gallon. This equates to a demand growth potential of over 2,700 gallons per LDV, or almost 25 million gallons Transports are not included in the Potential Propane Industry Demand for the entire industry. For Propane Autogas in Vehicles Owned By Propane Marketers (Estimated) chart because class 8 has been a limited focus market of Purchasing OEM or converting all bobtails, service trucks, rack PERC’s commercialization strategy, and there isn’t a class 8 product trucks, and LDVs owned by propane marketers is an overall demand available today. For the sake of comparison, the estimated transport growth potential of more than 233 million gallons annually. Current population is 2,176; PERC, using ICF 2016 calculations, estimates yearly U.S. retail propane demand for all markets is about nine billion that to be 3,830 for the whole industry. While transports only make gallons, so the conversion of industry fleet vehicles could be a 2.6 up a small percentage of the total vehicle population, they drive percent increase of total propane demand each year. Within the the most miles annually. Assuming that each transport travels up to domestic internal combustion engine market segment alone, ICF 50,000 miles per year and consumes propane at the rate of eight estimates current demand to be about 736 million gallons per year. miles per gallon, each transport represents 6,250 gallons of added Converting propane industry fleet vehicles to our own fuel could propane demand per year. That could add up to nearly 24 million increase demand in that market segment by over 30 percent. gallons for the industry. © 2018 by the Propane Education & Research Council THE CASE FOR PROPANE AUTOGAS VEHICLES How do these calculations apply to each marketer? How can they benefit from the adoption of propane autogas? Let’s begin with performance and cost comparisons that are negatively impacting budgets and profits for many marketers today. Diesel is the preferred engine fuel for many industries, including the propane industry. However, diesel engines are more complex and costly to own and operate. Here are a few well documented facts about the challenges with diesel engine and emissions technology today: • Diesel engines do not perform well in cold weather and, depending on the ambient temperatures, may not perform at all. • Diesel engines require block heaters, which can significantly increase electric costs and are reliable only when drivers remember to plug them in each night.
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