Crude Oil Prices Are Crushing Alternative Energy, But Not Propane…

Consumers have benefitted greatly from lower costs at the gas pump, but the continuing drop in crude oil prices has been an unmitigated disaster for much of the energy industry. A global oversupply problem has led to plummeting crude oil prices, a trend that’s expected to continue until at least 2017.

Yet while crude oil prices have left much of the oil and gas industry in full-on panic mode, a boom in propane exports has gone largely unnoticed. That is, until a Bloomberg report in February highlighted the record-high propane shipments buoying a troubled oil and gas market.

Based on data from the U.S. Energy Information Administration, U.S. propane exports rose 46% in 2015. The natural gas liquid, which is mostly used to heat homes and produce plastics, topped both monthly and annual export records, when it topped 750,000 barrels a day in December 2015 (14% of all hydrocarbon exports).

And now that the U.S. government has turned the tap on for crude oil exports, the propane boom is welcome news for an otherwise troubled industry. According to Bloomberg, “For all of 2015, propane exports averaged 616,000 barrels a day, up 46 percent from the record set in 2014 and more than five times the 2010 level.” Moreover, experts predict the boom will continue through 2016 and possibly into the 2020s.

Plus, propane fuel is also becoming a popular new choice for domestic trucking fleets.

“We have been using propane as a motor fuel on our trucks for many years. Over half of our fleet is powered by clean burning propane and our replacement vehicles will be propane powered,” said Thomas Link, President, Lin-gas, Inc. “Propane is economical, clean and reduces our maintenance costs. Most petroleum products have fluctuated wildly in the last several years, but propane motor fuel has continued to make business sense for us throughout these volatile price swings.”

This March at the NTEA Work Truck Show, NestlĂ© Waters North America and Bimbo Bakeries USA (known for brands like Entenmann’s and Sara Lee) announced that they were expanding their propane fueled trucking fleets this year.

For trucking fleets, propane has three benefits. It lowers emissions, has a more stable price (currently about $1.00 per gallon), and allows companies to save money on fuel costs. Bill Ardis, National Fleet Manager for NestlĂ©, said propane fuel is the company’s long-term solution for replacing diesel.

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