Where has all the LPG gone?

The number of service stations selling LPG looks set to continue its decline.

Federal government figures show demand for LPG in the 12 months to 30 June 2015 dropped 8 per cent off the back of a 4.3 per cent decline for the preceding year.

While fuel retailers contacted by RACV were reluctant to put exact numbers on how many of their sites were no longer offering LPG, the CEO of the Australasian Convenience and Petroleum Marketers Association, Mark McKenzie, estimates the decline in LPG sites at about 20 per cent nationally.

He says that of the 6400 services stations across Australia only about 2900 still offer LPG, down from 3500 a few years ago.

“We are hearing anecdotally – and it’s pretty strongly anecdotally – that when people are refurbishing their forecourts, if it’s a major refurb they’re electing to remove their LPG pumps … because they’re being under-utilised,” Mr McKenzie said.

Fuel retailing giant Caltex says it has 400 sites offering LPG but concedes some could be without LPG if current trends continue.

“As with any product or service we provide, any future investment will need to make sense in light of expected demand and the compliance costs associated with maintaining infrastructure,” a Caltex spokesman said.

A spokesperson for rival retailer BP also hinted LPG pumps could be phased out at some sites. “BP regularly reviews its product slate to meet the demand of Australian consumers. In the case of LPG, we have seen consumption declining over time in the Australian market.”

RACV Manager Vehicle Engineering Michael Case said there were various reports of LPG already being removed from some service stations.

“Anecdotally, LPG suppliers are removing some LPG supply arrangements from service stations and once that happens it’s highly unlikely they’ll be reinstalled.”

Mr Case said it was a particular issue for Victorians travelling interstate, where LPG availability is not as good as it is in their home state. (Victorians are by far the biggest consumers of the vehicle fuel claimed to reduce carbon dioxide emissions by 15 per cent.)

“Any reduction [in LPG availability] might affect anyone travelling outside of Victoria,” Mr Case said.

The reason for the decline centres heavily on the imminent shutdown of local vehicle manufacturing, which has for decades been the backbone of the LPG industry. The decline in large car sales from about 2010 also saw a corresponding drop-off in demand for LPG-powered vehicles.

From 2006 the industry was selling upwards of 13,000 new LPG vehicles each year, something that dwindled to just 2061 in 2015, according to figures from the Federal Chamber of Automotive Industries.

Traditionally many people have converted second-hand Falcons and Commodores to run on LPG.

But LPG conversions have also tapered off dramatically. Victorian figures supplied by the Automotive Alternative Fuels Registration Board show that between 1993 and 2009 on average 27,000 vehicles were converted to LPG annually, with yearly highs of up to 50,000.

But for the last three years that average has dropped to just 2535, with 2015 an all-time low of 1475.

Ford still offers a dedicated LPG Falcon, but that will end with the closure of its manufacturing facility in October this year. Holden ceased producing LPG Commodores in 2015 due to lacklustre demand.

The end of generous government incentives in 2014 also hit the LPG industry hard, while others point to the excise applied to LPG since 2011, which increased prices and meant that it takes longer to pay back the price of conversion.