The energy transition is underway – or so they say. Meanwhile, we need to fuel the world’s economy considering 80-85% of our energy still comes from fossil fuels. Regardless of how you feel about the energy transition – whatever fuels we choose to optimize, it is paramount that they are sturdy like the four legs of a stool (security, affordability, reliability, and sustainability). Each leg is uniquely important. If our electrons are free and sustainable – but not reliable, an economy can’t grow. If our supply chain is affordable and sustainable but not secure, an economy can’t grow. You get the point. Fortunately, propane meets each of the criteria.
- Energy Security – Oil & Gas Production at an all-time high: The U.S. is once again a Natural Gas and Oil powerhouse – and propane is a natural byproduct of natural gas production and oil refining. Which means that 97% of our propane is produced domestically. This allows us to manage and maintain a secure supply chain.
- Energy Affordability – Propane is subject to volatility as a commodity, but fortunately due to the abundance of supply – and in comparison, to alternative fuels, propane is still and is expected to be an affordable home heat fueling option.
- Energy Reliability – In relative terms – propane is easy to produce, ship, store and distribute. This allows us to manage winter reliability issues – in so far as we continue to invest in the necessary infrastructure.
- Energy Sustainability – Bio / Renewable Propane – Four out of Five New England states introduced renewable propane in 2023. Renewable propane is a by product of renewable diesel or in the form of Dimethyl Ether (DME). This is particularly interesting for the Autogas markets as an alternative to diesel.
Propane as a secure, affordable, reliable and sustainable home heat fuel has a bright future. However, there is a necessary capital investment to enter the Propane distribution market.
That is why there is continued consolidation amongst Propane marketers and still attractive multiples in the M&A space. If you are a propane distributor and considering your exit strategies or sale of your business – We can assist in developing a plan to get you to the right point. Starting with a review of your operations and a Business Valuation is a good start. Give us a call to start a confidential no pressure conversation – 207.747.9959
-Jeff ‘JT’ Tounge
