Propane distributer launches vehicle conversion effort
Chris Fleming, plant manager of Blue Star Gas in Santa Rosa, puts propane into a truck's tank. The propane distributor is going into a new business: converting fleet vehicles for propane fuel.
By MARK ARONOFF / The Press DemocratPublished: Monday, February 8, 2010 at 4:42 p.m.
Last Modified: Monday, February 8, 2010 at 4:42 p.m.
Propane is cheaper and burns cleaner than gasoline, but it powers just a small fraction of U.S. vehicles.
A Santa Rosa company wants to change that by converting cars and trucks to run on the alternative fuel.
“This is the biggest opportunity we've had — in terms of volume — in many years,” said Jeff Stewart, president of Blue Star Gas.
The 72-year-old family business is the largest independent propane distributor north of the Golden Gate, serving residential, industrial and commercial accounts from Santa Rosa to McMinnville, Oregon.
Most of its customers use propane — also called liquefied petroleum gas or LPG — for heating or cooking. It's the fuel of choice in rural locations not reached by natural gas utilities.
But propane also is the third most popular transportation fuel, after gasoline and diesel. Still, only about 200,000 U.S. vehicles are powered by propane, according to the Energy Department.
Blue Star is partnering with a North Carolina company, Alliance AutoGas, to convert vehicles in Blue Star's 45,000-square-mile territory.
The effort is aimed at the fleet market, including government and utility vehicles, taxis, shuttle vans, limousines, buses, and service or delivery trucks.
Fleets are ideal candidates for propane because vehicles can be refueled at a home base and they use models that are easier to convert, according to Alliance. They also travel high miles, cutting the time it takes for owners to recover the investment through fuel cost savings.
A typical conversion costs about $5,800.
Under the plan, Blue Star and Alliance will arrange to convert vehicles, install propane fueling stations, supply the fuel and provide service and technical support.
Blue Star will invest $1 million in the project over the next two years, Stewart said.
Propane vehicles produce fewer harmful emissions and greenhouse gases than gasoline or diesel, according to the U.S. Environmental Protection Agency.
Propane can cost 5 to 40 percent less than gasoline, according to industry and government estimates, and fleets are eligible for an alternative fuel tax credit.
About 90 percent of Blue Star's gas comes from domestic sources, Stewart said. “You are making a clean break with foreign oil,” he said.
There are some drawbacks, however. Not all vehicles can be converted. Propane-only vehicles get lower mileage, although hybrid propane-gasoline versions are available.
The hybrid conversion system used by Blue Star and Alliance hasn't been certified yet by California's Air Resources Board, so it can be used only on emergency vehicles.
But the system has been approved in Oregon, where Blue Star will make its initial push, Stewart said.
Blue Star has its roots in southern Humboldt County, where Garberville restaurant owner Dwight Knapp installed a propane system in 1938. He later piped propane to other downtown businesses and sold it to the public.
The Stewart family acquired the Garberville system in 1945. Over the years, they bought other local propane suppliers and set up a trucking network to distribute the fuel.
They opened a Sonoma County branch in 1969 and moved the corporate headquarters to Santa Rosa in 1996.
Blue Star now sells about 12 million gallons of propane a year to 12,000 customers in nine markets. It has 90 employees and about $30 million a year in sales.
Propane auto conversion is one of the ways Blue Star is using technology to grow the business, Stewart said. “I'm a big believer in technology,” he said.
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