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Page added on November 2, 2015
Heating oil vs. natural gas
HOPEFULLY, NEW ENGLAND WILL BE LUCKY this winter. No Polar Vortex. No endless snowstorm piling nine feet of frozen fluff on Boston. But whatever our luck, there are certain unavoidable facts of life that every New Englander will experience this winter.
Even the staunchest New England opponent of increased natural gas pipeline capacity cannot dispute that: (1) winter is coming; (2) our winters get darned cold; and (3) the typical New Englander again will pay a lot more for home heating than the typical resident of every other state but Alaska.
The Energy Information Administration’s recently released its “Short-Term Energy and Winter Fuels Outlook,” which shows regional heating fuel market shares in colorful pie charts. While heating oil/kerosene is a barely visible “sliver of the pie” in the Midwest, West, and South (maybe 1-2 percent), it is a very unhealthy portion of the Northeast’s (New England, New Jersey, New York, and Pennsylvania) “dessert” at a stunning 25 percent.
In New England, reliance on oil is even greater. The percentage of households heating with oil is 64.2 in Maine, 46.1 in New Hampshire, 43.8 in Vermont, 43.7 in Connecticut, 32.6 in Rhode Island, and 29.2 in Massachusetts. The national average is just 5.5 percent, driven up by New England. Massachusetts consumes the third-most residential heating oil of any state. Connecticut ranks fourth.
Beyond the environmental harm from inefficiently burning heating oil, why is New England’s “pie” so unacceptable? Because it costs much more than everyone else’s, and for no good reason.
According to the Energy Information Administration, on a million British thermal unit basis (MMBtu), delivered oil is consistently more than twice as expensive as delivered natural gas. Delivered oil cost over $30 in 2013-14, about $24 in 2014-15, and is projected to cost $22 in 2015-16. The price of delivered natural gas was less than $10 in 2013-14, dropped slightly in 2014-15, and is projected to fall to around $9 in 2015-16.
What does this mean for a typical New Englander? The Energy Information Administration says a Northeast household consumes 850 to 1,200 gallons of heating oil in winter. In 2013-14 (the Polar Vortex winter), that oil cost $3.88/gallon. Thus, Northeast homes using oil spent about $3,298 to $4,656 on heating. A Northeast household using natural gas consumed 84.1 thousand cubic feet (Mcf) at $11.55/Mcf, for a total cost of just $971. If yours is one of the roughly 40 percent of homes stuck using heating oil, you could have spent $3,685 more than your neighbor on heating. Compared to your sister in Ohio using natural gas ($766), you could have spent $3,890 more. Compared to your cousin in Oregon ($460), you may have spent $4,196 more. How is that acceptable? Have we failed some regional IQ test?
Some public officials say that natural gas pipelines aren’t needed and that crashing oil prices will help. Not so, says the Energy Information Administration,, which projects delivered oil to cost about $3.04 this winter. That means you may only pay $3,648 to heat your home. What a reprieve, surely indicative of a functional energy paradigm! Meanwhile, your neighbor using natural gas will spend about $921 and fall off his couch laughing.
The story these numbers don’t tell is that even natural gas prices in New England are far higher than anywhere else in the nation, due to our natural gas pipeline constraints. The natural gas statistics above use consumption and price data for the “Northeast,” which includes New York, New Jersey, and Pennsylvania, and all of which have greater access to and cheaper prices for natural gas than New England. Don’t let the inclusion of these states fool you. For example, in New England the price of natural gas at the Algonquin Hub was $18.86/Mcf for winter 2013-14, far higher than the Northeast price of $11.55/Mcf, the Midwest price of $8.70/Mcf, and the West price of $9.96/Mcf. These exorbitant costs will trickle down to consumers as higher delivere- gas prices over time. If you’re stuck using oil, the difference between your heating bill and that of your neighbor using natural gas may decrease. But that doesn’t make you any better off and only hurts your neighbor.
Another critical fact is that a large proportion of people forced to use oil, and some who use natural gas, desperately need public heating assistance. For example, Massachusetts provided low-income heating assistance to over 183,000 households in 2014, has a 2015 LIHEAP budget of over $146 million, and rarely has enough money. The Massachusetts Department of Housing and Community Development found: “The rising cost of heating oil and high utility prices disproportionately affect the low-income population of the Commonwealth” and “that households with income below 100 percent of the Federal Poverty Level spend … 8.5 percent to 10 percent [of their income] on home heating bills alone.” Connecticut’s Consumer Advocate reported recently that one-sixth, or 218,850, of Eversource’s Connecticut customers are non-hardship customers who cannot afford to pay their bills.
Here are the most telling facts. On a typical New England winter day, we use 3.4 billion cubic feet (Bcf) of natural gas to heat homes and businesses. On a cold day, we use 4.5 Bcf just for heat. But we have only 3.6 Bcf/day of pipeline capacity to bring natural gas into New England. We need 1 Bcf/day of gas for electricity generation, leaving us about 2 Bcf short of gas on scores of days. This chilling arithmetic doesn’t account for the hundreds of thousands of consumers scrambling to get off oil and onto gas.
The inescapable fact of life for winter in New England is that we need adequate natural gas pipeline capacity to meet our heating needs cleanly and affordably, and to meet our electricity needs without running dirty, expensive coal and oil plants. Both Kinder Morgan’s and Spectra’s pipeline projects are necessary to meet our heating needs, get off oil and coal, and reduce our carbon footprint.
Let’s all hope for luck this winter. Luck, however, is not an energy policy, and it is not an ethical policy. Those of us who are more fortunate might well consider the consequences of our energy inaction for those upon whom luck has not smiled.
Anthony Buxton is chair of the Energy Group and Benjamin Borowski is an attorney at PretiFlaherty, a law firm affiliated with the Coalition to Lower Energy Costs, which has close ties to natural gas pipeline companies and groups that support pipeline expansion in a bid to lower power prices.
17 Comments on "Heating oil vs. natural gas"
BobInget on Mon, 2nd Nov 2015 8:59 pm
Keystone canceled on account of low oil prices and lack of interest.
Oh, BTW, with Energy East going ahead, someone tell me where our imported oil will come from?
rockman on Tue, 3rd Nov 2015 4:47 am
Bob – I have’t seen an official cancellation yet…they try to not advertize such situations. As pointed out before a project like the northern section of KXL requires a sufficient level of “subscription”: oil owners contractually commit to move (and pay) a fixed volume thru the pipeline. From what I’ ve read they have never had enough subscribers to build it even if they got the permit. All the alternative transport options that were developing was the competition. Today there’s sufficient transport systems. And with the oil price crash I doubt there will be any additional needs for a long time. Permit or not it seems very unlikely it will be built anytime soon.
Kenz300 on Tue, 3rd Nov 2015 8:43 am
Wind and solar are the future……Climate Change is real…. we need to deal with the cause (fossil fuels)
Wind Power Now Cheaper Than Natural Gas for Xcel, CEO Says – Renewable Energy World
http://www.renewableenergyworld.com/articles/2015/10/wind-power-now-cheaper-than-natural-gas-for-xcel-ceo-says.html
Solar Beats Gas in Colorado – Renewable Energy World
http://www.renewableenergyworld.com/articles/2015/08/solar-beats-gas-in-colorado.html
Solar and Wind Just Passed Another Big Turning Point
http://bloom.bg/1WK34MZ
Revi on Tue, 3rd Nov 2015 9:33 am
This author is espousing more natural gas, but the pipelines are not being built, and the source may not be as abundant as it was when they planned them. We have a pipeline that was supposed to bring natural gas into New England from Cape Sable, but the supply wasn’t as abundant as they thought. Now it is being used to send gas up to Canada.
rockman on Tue, 3rd Nov 2015 11:07 am
Revi – I also wonder how many folks in New England know about efforts underway to move Marcellus NG to the SE…esspecily Florida. Georgia has been trying halt plans to bypass them on the way to FL.
Hello on Tue, 3rd Nov 2015 11:58 am
Keeping VT inhospitable cold and expensive is good against overpopulation.
Too bad oil is so cheap now. And I honestly believed the fist of PO will smash civilization to pieces in 2008. How wrong I was.
Are you guys on PO still believe next year is THE year? Jut like you did since a decade ago?
rockman on Tue, 3rd Nov 2015 12:44 pm
Hello – Actually there were a lot of folks that got smashed to pieces by high oil prices back then. And some, like the Rockman, who did really well for the same reason. And other high income consumers who suffered very little if at all.
Nothing has ever affected “society” as a whole. Different sectors benefit and loose at the same time.
Chubasco on Tue, 3rd Nov 2015 1:17 pm
Heck, $1500 of straw just insulated my 1500 sqft house walls to R-30+. $4k/year will buy a lot of dang insulation…
ghung on Tue, 3rd Nov 2015 1:31 pm
Hello asked; “Are you guys on PO still believe next year is THE year? Jut like you did since a decade ago?”
Still painting with a broad brush, Hello? Makes you look stooopid.
yellowcanoe on Tue, 3rd Nov 2015 1:53 pm
This crisis has been around for a quite a few years now. It’s hard to understand why people have not yet figured out that the only way to substantially reduce their heating costs is to upgrade their homes to be more air tight and have adequate insulation. It’s not easy doing that on older homes but it sure beats spending thousands of dollars on heating fuel each winter. Governments should be subsiding retrofitting houses with better insulation instead of subsidizing heating fuel.
Hello on Tue, 3rd Nov 2015 2:09 pm
yellowcanoe
Why would you want to spend money on insulation if the state and many other relief organizations and funds practically throw heat assistance money at you. And since it’s free there’s no incentive to save. Just put on your favorite shorts and t-shirt and crank it up.
It makes no sense.
Bob Owens on Tue, 3rd Nov 2015 2:09 pm
The only way out of this dilemma is some serious insulation retro-fitting. That is: house-by-house, block-by-block, paid for by fuel taxes on the projected savings (or some such mechanism). Then you don’t need gas or oil and the retrofits are effective for the life of the buildings. An added benefit is more resilience during emergencies like power outages. This would require an enlightened Govt and populace, which is probably not going to happen.
ghung on Tue, 3rd Nov 2015 2:52 pm
yellowcanoe said: “Governments should be subsiding retrofitting houses with better insulation instead of subsidizing heating fuel.”
They are, in the US anyway. There have been plenty of state and federal tax credits and incentives for years. Last winter I helped a friend blow an additional R-16 into their attic, and added a radiant barrier. Took us most of one day’s work. Their eventual cost was about $130 after state and federal tax credits. I’ve helped a number of folks do the same thing. Virtually every one has seen a payback of just a few months. After that, it’s gravy.
Exterior walls, windows and doors are more costly and involved, but incentives still apply. A lot of folks don’t want to bother; would rather complain.
Even some renters who pay utilities can benefit if staying for a couple of winters. Work a deal with the landlords; they get the tax break, you supply the labor.
Mike616 on Tue, 3rd Nov 2015 2:53 pm
@yellowcanoe
So, you really know nothing about the program.
Ted Wilson on Tue, 3rd Nov 2015 9:28 pm
Instead of exporting natgas to other countries, pipelines can be built to supply natgas to Northeast.
Fuel oil is dirty and may adversely affect the health of people who are using it and also those in the neighborhood.
If we are so concerned about Volkswagen’s Dieselgate, then we should be doubly be concerned about this fuel oil.
Also the fuel oil that we save can be converted to Diesel/Gasoline in refineries to be used for transport.
Earlier 25% of the electricity in US came from Oil, now its down to 0.5 %.
Hope the households also do the same.
If natgas is also expensive, then they may try the wood which is lot more cheaper.
apneaman on Tue, 3rd Nov 2015 10:05 pm
Hello, how exactly does it work?
“the state and many other relief organizations and funds practically throw heat assistance money at you.”
Do you have examples of how said throwing works? Do you just show up at the office with a catcher’s mitt and a sad story?
makati1 on Wed, 4th Nov 2015 3:52 am
What cold? What winter? Days in the upper 80s and nights in the mid 70s, year round. A rain shower or thunderstorm most every day in the wet season and showers occasionally in the dry season. Not even a chance of frost, ever. What’s not to like?