Liquefied Petroleum Gas (Bottled Gas) Dealers

SIC 5984
LIQUEFIED PETROLEUM GAS (BOTTLED GAS) DEALERS

This industry consists of companies that primarily sell bottled or bulk liquefied petroleum (LP) gas, which is used mainly for heating homes and businesses in rural areas. This classification includes other byproducts of crude oil, such as bottled butane gas, used as an additive in gasoline and for lighters, and bottled propane gas, which is most often used to produce LP gas.

NAICS Code(s)

454312 (Liquefied Petroleum Gas (Bottled Gas) Dealers)

This industry arose from the industrial revolution, when manufacturers sought plentiful, easily transported fuel. In the twentieth century, dealers of liquefied petroleum and propane and butane gases had customers in commercial, industrial, and residential markets. Industry sales rose with population growth and industrial expansion. However, profitability varied due to changes in demand and production costs, both of which were affected by such factors as economic conditions and the price of crude oil imports used to make these products.

In 1997, the fuel industry employed 98,400 workers, most of whom worked 37 hours a week for an average wage of $13.26 per hour.

In 1999, the industry leader in this category was AmeriGas Partners, L.P. of King of Prussia, Pennsylvania, with sales of $872.5 million and 5,026 employees. In addition to selling engine fuels, AmeriGas sold propane to more than 950,000 residential, industrial, agricultural, and commercial users, and possessed a fleet of 3,400 vehicles. The company is a wholly owned subsidiary of UGI Corp.

Second in this industry was Ferrellgas Partners, L.P. of Liberty, Missouri, with 1999 sales of $624 million and 4,463 employees. Ferrellgas also owned its own delivery fleet, which included 4,000 vehicles, most of which ran on propane gas. Another industry leader was Suburban Propane Partners, L.P. of Whippany, New Jersey, with 1999 sales of $544 million and 3,179 employees. Suburban Propane was spun off from the British conglomerate, Hanson PLC, which still owns 24 percent of the business. The company operated 350 stations in 44 states, and owned its own storage units, railroad tank cars, and trucking fleet. Cornerstone Propane Partners, L.P., of Watsonville, California, another industry leader, employed 2,396 workers.

Liquefied petroleum gas dealerships were also secondary businesses for companies in related industries, such as dealers in SIC 2869: Industrial Organic Chemicals and businesses in SIC 4925: Mixed, Manufactured, or Liquefied Petroleum Gas Production and/or Distribution. In 1989, Quantum Chemical Corp., a retailer in industrial organic chemicals and propane gas, made news when it purchased Petrolane, Inc. in a partnership deal with First Boston. According to Chemicalweek, the purchase was "in line with the company's strategy to grow its propane business through acquisitions." Though a secondary business for Quantum, the propane operations of the company held about 15 percent of the propane market in 1989.

In the 1990s, demand for liquefied petroleum and other petroleum products grew at roughly 1.5 percent annually. However, demand for commercial and residential use declined while transportation use rose.