PRO PA NE
F-350 with a small utility body, for roughly $75,000. "You need those three vehicles at a minimum," an industry expert said. Once a newcomer has found a place to buy propane, a storage
facility must be established. For a bulk plant with a 30,000-gallon tank on land you already own: $250,000. That includes the cost of site work such as piping, concrete, fencing, electricity lighting and security. "You've already spent about $600,000 and you haven't even
bought a tank yet," the industry expert said, referring to the tanks that go on customers' property. It's a peculiarity of the propane business that the distributor owns the tanks that go on customers' property. Tanks that hold 100 gallons typically cost about $400. "Buy one hundred of those for a hundred customers and
you've spent $40,000," the industry expert said. "When you finish putting those hundred tanks in the field, you're going to have to spend another $40,000 to buy another hundred," he said. Larger tanks, which hold 1,000 gallons, cost about $2,000, he said. Fuel oil dealers are going into the propane business "for cus-
tomer retention and margin enhancement," the expert said. The propane business must operate on a higher margin than
a fuel oil business the expert added. "If you run your fuel oil business on margin X—whatever X is—you had better run your
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FEBRUARY 2012 | FUEL OIL NEWS | www.fueloilnews.com
