Shale, Propane and Fleets

08.13.15

Sales of propane-powered vehicles are on the rise in the U.S., according to Bloomberg. The increase is especially noticeable among companies that operate fleet vehicles that would normally be powered by diesel.

“There’s a dramatic increase in the rate of adoption in fleets. It’s really the economic savings that people can achieve even compared to the lower gasoline prices,” said Jeff Stewart, the president of Santa Rosa, California-based Blue Star Gas.

A surge in liquid fuel inventories such as propane, butane and ethane is prompting the change. The excess fuel is a result of the continued shale boom. Propane prices are dropping and becoming an attractive fuel option even in the face of lower crude oil prices. Propane is now trading near a 13-year low and is 75% cheaper than diesel fuel.

“Right now we’re in a period where there are significant savings to propane in many applications,” said Michael Sloan, a principal at ICF International Inc., a Fairfax, Virginia consulting firm.

There are estimates that sales of propane-powered vehicles will reach 20,000 in 2015. This is a fraction of the anticipated 3 million fleet vehicles expected to be sold, but the number represents a 35% increase over last year’s sales. Small delivery companies and UPS are among those increasing their propane-powered fleets. (Source: Bloomberg)


Articles are chosen for summary in this Market Intelligence blog based on newsworthiness in conjunction with The Infinite Loop themes. Any opinions and views expressed in the articles are generally those of the underlying author from the source listed, are not necessarily current as of the date of this blog, may change as market or other conditions change, and may differ from views expressed by Ivy Investment Management Company and its associates or affiliates. Actual investments or investment decisions made by Ivy Investment Management Company and its affiliates will not necessarily reflect the views expressed in the articles. These articles are distributed for educational purposes only and are not investment advice or a recommendation to purchase, sell or hold any specific security mentioned in the article or to engage in any investment strategy. Investment decisions should always be made based on each investor’s specific financial needs, objectives, goals, time horizon and risk tolerance. Securities discussed may not be suitable for all investors.