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A Very Tempting Propane Offer- Too Good?

Discussion in 'Alternative Fuel Forum' started by AWilsonCreativeServices, Mar 4, 2014.

  1. AWilsonCreativeServices

    AWilsonCreativeServices LawnSite Member
    Posts: 176

    Hey Y'all-

    I was at an industry expo today and wandered over to talk to the propane guys. They told me they will do the following FREE if I buy 500 or more gal from them a year:

    1. Will convert all my mowers and other 4 stroke equipment (my mini-skid) at no cost to me (and will convert back if I'm unhappy at any time.)
    2. Install a 200 gal tank at my shop so I can fill up whenever I need
    3. Set the price of propane at $1 less than whatever regular octane gas is selling for.
    4. Give me one tank for each machine (obviously), and an extra one per unit too.

    When I asked, as everyone has, why they're incentivising it so much, they said that the propane used for heating's seasonal sales are opposite of what my operating season would be, and they want to expand their sales. The propane cost would go up in the winter, but he said that since I wouldn't be using much then its not a big deal, and if I wanted I could get my tank refilled before it gets cold if I was worried. Also, all the added benefit to be thought of:

    1) Being much more environmentally friendly (which I am interested in and may help decide contracts or be a marketing point)
    2) Having engines that run more cleanly=longer life of engine, maintenance, etc
    3) You can leave a propane engine overwinter and fire it up in the spring& be ready to go, where as gas+ethanol+sitting= problems
    4) Propane doesn't go bad in a short period like gas sitting in a tank would

    They have a few larger area city municipalities doing it, and are currently demoing with 2 large state universities, one of which is in my hometown and is my alma mater.

    I invite your opinions and insight (I have read through some threads on this, and it seems like there's a lot more interest than experience at this point, which makes sense). If you have actually converted, please tell me how this prospective deal compares to what you're getting.
  2. AWilsonCreativeServices

    AWilsonCreativeServices LawnSite Member
    Posts: 176

    P.S.- He said here in Alabama, I need no special permitting or markers or anything if I carry less than 1,000 gal. Rupturing tanks are not an issue, as they said you have to shoot a .357 through it at close range to penetrate the tank, and I wouldn't be worried about running out bec I'd have multiple extra tanks.

    I know some of the potential downsides are the 'unknown' factor, but they covered most of my other worries.
  3. djagusch

    djagusch LawnSite Platinum Member
    from MN
    Posts: 4,230

    If they are selling it a $1 under the cost of gas that is where they are making the money. You will use more per hr than gas (about 20% more). During the summer propane can be bought anyday under $2/gal normally $1.69 to $1.89. If gas is $4/gal they are making a extra $1.10 at least per gallon over their normal mark up. Also at that point you are basically breaking even if you account for the additional consumption.
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  4. Patriot Services

    Patriot Services LawnSite Fanatic
    Posts: 12,886

    So you are locked into buying inflated propane from him forever. The conversion cost isn't that great. Have you looked into that side of it?
    Posted via Mobile Device
  5. mrlpg

    mrlpg Inactive
    from US
    Posts: 17

    Nothing is free. I disagree with DJ with the 20% more usage, but do agree that setting your price $1 below any grade is suspect. They are building in all of that cost into your price and will potentially lock you in for a long period of time. Not all companies operate the same way.. I will say that there are plenty of upsides to converting over to propane that you did hear, so you should feel good about your decision.
  6. AWilsonCreativeServices

    AWilsonCreativeServices LawnSite Member
    Posts: 176


    I appreciate the input from everyone. I am still interested in the conversion, but am going to price out what it'd cost for me to do the convert, get a used tank, and get a contract with a local supplier for the summertime. I'll let you know what I find out by the end of the month.

    Thanks again,

  7. newz7151

    newz7151 LawnSite Silver Member
    from Tejas
    Posts: 2,419

    Well let's see.. here's a question I have:

    Is there anywhere in the deal that they tell you the propane from that 200gal tank can ONLY be used in the tanks for the mowers and other equipment?

    Propane for a bottle refill right now is running about $3.89 here in the central Texas area, 87 octane gas at Wal-Mart is/was $3.22 gallon today. Now, which gas pricing are they using in your area, a daily reported average cost or a national average?

    I've heard reports of propane up north going for $7.00/gallon or more right now with the winter we're having. If you aren't limited to using it JUST in your mowers and all of the other questions I raised work out, then I would say go for it. I'd also look into converting anything else you can to propane also.. say a small vehicle or two?
  8. Torquin

    Torquin LawnSite Member
    Posts: 16

    So, how are you coming with your evaluation? While I am not a pro, with business funds on the line, I am curious about the feasibility, financially, about this conversion.
    I was looking at http://www.afdc.energy.gov/fuels/fuel_comparison_chart.pdf and saw that Propane has 73% of the energy that gasoline does, and like others said, I wonder if you will end up a wash in fuel spending.


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