Fuel Oil & LP Gas Dealers Industry Profile

The US fuel oil and LP gas dealer (fuel dealer) industry includes about 10,000 establishments (single-location companies and branches of multi-location companies) with combined annual revenue of about $40 billion. Major companies include AmeriGas Partners, Ferrellgas Partners, and Star Gas Partners. The fuel dealer industry is fragmented: the top 50 companies account for about 40 percent of sales.

The term "LP gas" is used as shorthand for both liquid petroleum gas and liquid propane gas. Propane accounts for the majority of LP gas sales. Major uses for LP gas include heating, cooking, powering vehicles, and drying crops. Major uses of fuel oil include heating and cooking.

COMPETITIVE LANDSCAPE

Residential, commercial, industrial, and agricultural heating needs drive demand. The profitability of individual companies depends on efficient operations, low-cost purchasing, and competitive pricing. Large companies have advantages in purchasing, finance, and distribution. Small companies can compete effectively by serving a local market, offering unique products, or providing special services. The industry is capital-intensive: annual revenue per employee is about $500,000.

Fuel dealers compete with suppliers of other energy sources, including electricity and natural gas. The increased availability of natural gas has resulted in stagnant and declining markets for LP gas and fuel oil as home heating sources.

PRODUCTS, OPERATIONS & TECHNOLOGY

Major products sold include fuel oil (40 percent of industry sales); LP gas (40 percent); and auto fuel (10 percent). Fuel oil includes various grades (mostly No. ...