LP Gas, May 2010

I N F R A S T R U C T U R E Continued from page 27 ply defi cit comes through severe cold better than the Northeast because it has ample secondary storage levels Whitley says The biggest logistical problem this industry has remains the same major areas of retail consumer demand are located far from major points of production he maintains The tertiary customer storage issues should be dictating to our dealers that they need more storage especially in the Northeast where theyve had many heating oil conversions The study shows that small independent marketers selling fewer than 12 million gallons have the best average turnover rate under 101 among retailer companies They also have the highest storage volume as a percentage of sales 99 see charts pages 23 27 Marketers with annual sales between 5 million and 10 million gallons had the highest turn rate 180 and the lowest storage volume as a percentage of sales 56 the study found Based on responses from four of the fi ve master limited partnership companies the major multi state marketers average 141 turns Their storage volume as a percentage of sales is a healthy 71 see charts pages 23 27 Due to all the consolidation in the industry the common explanation has been that the big guys were the culprits for some of the large turnover numbers on storage But surprising to us they werent the problem Whitley says Another perception was that the small guys dont have the cash to buy adequate amounts of storage Yet they ended up with the most storage based on their sales At fi rst we really found that surprising But it makes sense when you consider the fact that most start ups begin with a 30000 gallon tank and have to grow to 429000 gallons per year in sales before their storage turnovers exceed the industry average Theres a lot of small propane companies with sales below that mark Whitley explains More bulk storage needed Since there is little chance of expanding the underutilized pipelines or adding major primary storage facilities in the most critical regions marketers must continue growing bulk plant storage to cut the number of inventory turns and reduce reliance on the infrastructure for just in time deliveries Whitley says A similar recommendation in 2000 led to the National Propane Gas Association securing federal tax incentives for those investments They apparently succeeded in prompting marketers to expand bulk storage from 92 million Continued on page 30 No More Death By Powerpoint Safety Presentations That Make An Impact My presentations eliminate fear inform and inspire safe practices Most importantly my presentations will have a lasting residual impact on your organization and the people who protect the golden goose every day Today more than ever propane marketers need cutting edge analysis and advice regarding safety and insurance management issues As a third party working for you I can help you sort the truth from the selling JAYJOHNSTON The Safety Leader For scheduling information and a free review of how my services prevent accidents and save money write me at Jay@ TheSafetyLeader com or call 612 802 0663 28 LPGas May 2010 www LPGasmagazine com