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Liquefied Petroleum Gas (LPG)

LPG is produced as a byproduct of natural gas purification and oil refining. Its most common commercially available form, propane, is widely used as a fuel for heating, cooking and transportation. LPG also is used to generate small amounts of electricity for homes and commercial establishments. LPG electricity generation is still undergoing research and development.

Texas is the nation’s largest producer and consumer of LPG, as its production is intertwined with the oil and gas industries. LPG is mostly propane, butane or a mix of the two. It also includes ethane, ethylene, propylene, butylene, isobutene and isobutylene; these are used primarily as chemical feedstocks rather than fuel. LPG has seen its market share for transportation decline as other alternative fuels have increased. LPG for heating and cooking is expected to continue to be common in Texas, as is its use as a chemical feedstock.

Cost

Per Million Btu (2005) Direct use: $12.2170
Per Gallon $3.12 (January 2008 national average for propane)71
Per Gallon of Gasoline Equivalent $4.31 (January 2008 national average for propane)72
Direct Subsidy Share of Total Consumer Spending Federal: 0.5 percent (oil and gas combined); State and Local: 1.5 percent (oil and gas combined).73
Notes Propane is produced from both crude oil refining and natural gas processing; its price is more influenced by the cost of crude oil because propane competes mostly with crude oil-based fuels. LPG transportation costs include costs for pipeline construction and maintenance as well as for trucking, rail and water transport. The residential cost of propane per gallon on March 18, 2008, was $2.60.74

Economic Impact and Viability

Wages and Jobs LPG production is intertwined with that of oil and gas and it is therefore difficult to separate them to estimate LPG’s economic impact. In 2006, about 3,075 Texas LPG dealers earned a total of $31.9 million.75
Regulatory Climate LPG is a byproduct of oil and natural gas production, so its regulatory implications are similar to those for oil and gas.
Texas Competitive Advantage Texas is the nation’s largest producer and consumer of LPG. Chemical feedstock uses account for 90 percent of Texas’ LPG use; nearly all of the remaining 10 percent produces energy.76
Notes A report commissioned by the National Propane Gas Association estimated propane’s contribution to the Texas economy was $3.8 billion in 2002. This study accounted only for propane, the most common form of LPG, and not other varieties such as butane.77

Availability and Current Infrastructure

Estimated Resources in Texas Reserves of LPG are tied to those of crude oil and natural gas.
Current Fuel Production Approximately 305 trillion Btu (2006)78
Consumption in Texas Approximately 1,497 trillion Btu (2005)79
Number of Fueling Stations in Texas 556 (2006)80
Vehicle Availability LPG-fueled vehicles are becoming uncommon. Original equipment manufacturers no longer produce LPG-fueled light-duty vehicles in the U.S.
Notes In 2005, Texas consumed 55.8 percent of all LPG consumed in the U.S.81

Environment, Health and Safety

Greenhouse Gas Emissions Burning LPG produces 139 pounds of CO$1 per million Btu of heat energy produced.82 Transportation uses of LPG produce approximately 20 percent less CO2 than gasoline.83
Air Pollution (Non-Greenhouse Gas) LPG vehicles release 20 percent less nitrogen oxide and 60 percent less carbon monoxide than gasoline vehicles.84
Solid Waste LPG refining produces sludge that must be processed and disposed of.
Land Use LPG is a byproduct of oil and natural gas production, so its land use implications are similar to those of oil and gas.
Water Withdrawal LPG is a byproduct of oil and natural gas production, so its water withdrawal implications are similar to those of oil and gas.
Water Consumption LPG is a byproduct of oil and natural gas production, so its water consumption implications are similar to those of oil and gas.
Water Quality LPG is a byproduct of oil and natural gas production, so its water quality implications are similar to those of oil and gas.
Notes Natural gas purification produces about 55 percent of all LPG, while crude oil refining produces about 45 percent.85

Fuel Characteristics

Energy Content Propane has an energy content of 91,000 Btu per gallon.86
Renewability LPG is derived from fossil fuels, so it is not a renewable resource.

Other Issues

Dependence on Foreign Suppliers LPG is a byproduct of oil and natural gas production, so its import implications are similar to those of oil and gas.
Price and Supply Risks The price and availability of LPG are tied to the price of crude oil and natural gas and therefore to their risks.
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