Propane Industry Releases 2004 Sales Report, Announces State Rebate Funding Allocation Methodology


Washington, DC (April 14, 2006) —More than 11.1 billion gallons of odorized propane were sold in the United States in 2004, a 4.1 percent decrease from 2003 due to warmer-than-average weather and higher prices, according to a recently completed survey of propane sales trends compiled by the American Petroleum Institute (API).

The 2004 Sales of Natural Gas Liquids and Liquefied Refinery Gases, which is funded by the Propane Education & Research Council (PERC) and produced in collaboration with the Gas Processors Association and the National Propane Gas Association, is the only source of national and state-by-state sales data on odorized propane markets.

In response to industry concerns about the accuracy of the survey, PERC retained Energy and Environmental Analysis, Inc., to review the technical aspects of the survey and recommend changes that would enhance the reliability of the survey results. EEA observed that the survey approach failed to adequately account for odorized propane transfers between Petroleum Administration Defense District (PADD) by truck and rail. Correcting this error in the 2004 survey resulted in significant shifts in the total gallons reported state by state and, because the survey is used by PERC to allocate rebate funding to the states, significantly changed some states’ rebate allocations. For example, under the 2004 API survey results, Texas would receive $292,281 less than its 2003 allocation, while California will receive $189,410 more than 2003.

“In the past, the API survey methodology has relied on regional estimates of total odorized propane sales that failed to fully account for rail and highway transportation between regions,” said Michael Sloan, senior consultant for EEA. “API’s revisions to the survey for 2004 eliminate the potential for a bias in the survey results affecting the reported state sales data and improve the overall quality and accuracy of the survey.”

At its April meeting, the Council voted to accept the 2004 API survey results as the basis of allocating state rebate funds. States that are due increases will be paid the increases, while states that were allocated less money than expected can come to the Council for extra funds required to fulfill contractual obligations. The Council also encouraged state propane gas associations to be prepared in the future for possible funding allocation changes, including creating funding reserves in the event of lower-than-normal sales in a state.

The 2005 API survey will be sent to the industry in mid-May. Complete industry participation is essential to continuing to improve the accuracy of the report, said PERC President and CEO Roy Willis.

“Our industry must have 100 percent participation in this survey to guarantee that we maximize the report’s accuracy and ensure that each state receives its fair share of rebate funds,” Willis said. “Improving our industry’s participation is the most important step that can be taken to improve the quality of the survey, which remains the only regularly published source of data on state-by-state sales of odorized propane and which is used by propane marketers, investors, common carriers, and others with an interest in our industry.”