(The Wall Street Journal – September 2013) Propane Distributors Seek to Boost Demand with Lawn Mowers (By: Tom Fowler)
Scrambling to find new ways to boost demand for propane in the U.S., distributors are touting the benefits of propane-fueled lawn mowers.
The propane industry has set its sights on that symbol of American middle-class achievement: the lawn mower.
Blame it in part on the natural-gas drilling boom, which has left distributors scrambling to find new ways to increase demand for propane.
A liquid cousin to natural gas, propane is best known for home heating and backyard barbecues, although it is also used in the chemical industry and as a fuel in farm equipment. It is easier to transport in liquid form than natural gas, so it generally served areas disconnected from natural-gas pipelines.
But when domestic natural-gas production took off late last decade as companies found ways to economically tap into vast shale formations, more pipelines were built and the steady decline in propane's domestic market share accelerated…
… How much the push into lawn mowers will help propane retailers remains to be seen. The market for propane in mowers is much smaller than the residential market, so the industry has a lot of ground to cover. In addition, the U.S. has become a net exporter of propane in recent years—supplying countries such as Mexico, Brazil, Ecuador and Chile with propane for residential heating and cooking. That is starting to push wholesale prices up from their historically low levels of recent years, threatening propane retailers' margins.
Exports grew to about 8.7 million barrels in July 2013 from 2.7 million in July 2010, according to data provider IHS Waterborne Energy. And big exporters such as Enterprise Products Partners LP EPD +2.98%and Targa Resources Partners LP NGLS +3.20%are expanding capacity in anticipation of even more growth.
Rusty Braziel, an energy-supply analyst with RBN Energy LLC, says that isn't sitting well with the propane distributors he spoke with this summer. "They were a pretty depressed bunch by the time I was through."
