Analysis of COVID-19 Crisis-driven Growth Opportunities in Propane Market

Propane Market: Favorable Infrastructure Allowing Increased Number of Fuel Stations

Robust infrastructure facilities are the main foundation for the efficient delivery of any fuel. Since the propane infrastructure is well established in the U.S., most consumers are able to locate fuel stations within close proximity to refuel their vehicles.

Stakeholders in the propane market are eyeing the U.S. to build several propane stations to cater to the growing needs of consumers. The process of propane production, storage, and distribution is easily made available for market players in the U.S. With not much of initial investment, players of the propane market are capable of building several propane stations, just by investing in the fuel dispensing equipment, including storage tanks, pumps, and card readers at the stations.

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A lot of suppliers in the U.S. offer budget-friendly leasing of tanks, dispensing equipment, and pumps in return for a fuel supply contract. On the other hand, manufacturers in the propane market can place propane dispensers alongside diesel, gasoline, and other fuel dispensers, since the infrastructure needed for propane is similar to these other fuels.

propane market infographic

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Propane Market: Community Propane Systems Increasingly Used in Upmarket Residential Townships in the U.S.

Since the residential sector accounts for the highest share of the propane market, which tantamount to ~43% for propane-based applications, market players are providing innovative offerings to consumers. For example, builders and developers in Texas, U.S., are offering community propane systems to property buyers. Using community propane systems instead of individual tanks helps builders in creating more space for designing driveways, swimming pools, septic tanks, and other value-add amenities in large township projects. Thus, with the help of centralized propane distribution, buyers can use gas systems just like natural gas in cases when a natural gas station is not present in close proximity.

Upmarket residential neighborhoods in the U.S. lack access to natural gas. Developers build propane tanks outside the entry gates to these communities to avoid the barreling of individual tanks inside the community. To simplify the process, players operating in the propane market bill homeowners according to their usage, who need not pay upfront during the time of delivery. As such, propane companies are building strategic ties with upmarket home-developing companies to arrive at profitable barter transactions. Home-developing companies agree to build propane gas infrastructure at their own expense, and propane companies agree to set up propane appliances. Along with centralized propane distribution, homeowners are also rewarded with propane-fueled water heaters, gas cooktops, and cloth dryers.

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Portable V/S Standby Generators: A Dilemma for Consumers

Portable generators serve as a budget-friendly option for consumers to buy and install at home. When a portable generator is connected with a home’s circuit-breaker panel, it generates power that is as good as a standby generator. These also have built-in outlets for easy connection with extension wires in the absence of a transfer switch.

However, when portable generators run out of fuel, they need to be wheeled out and connected to a transfer switch. On the other hand, standby generators do not require huge quantities of fuel, and serve as a sustainable option during a power outage. Although standby generators cost more, they provide gold-standard backup power and sustain well during natural calamities.

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