| The answer is, of course, that no one has a crystal ball.
But there are some very instructive lessons to find in history.
In Connecticut, in 18 out of the past 20 years. Oilheat has
cost less than natural gas, propane, coal, and we here in Connecticut
pay the equivalent of $7.44 a gallon for electricity [@ 18c
per KwH] – among the highest electricity costs in the
lower 48 states.
So before anyone decides to switch heating systems for whatever
is being trotted out as good for the moment, it’s very
important to stop, take a deep breath, and review some other
known facts about home heating.
First, take stock of the value of the investment you already
have in your heating system. The average heating system will
last for about 25 years, so the money you have tied up in
your current system is not insignificant. Upgrading an existing
system can often boost efficiency at a fraction of the cost
of a new system.
Second, take stock of the value of your storage tank. Older
style storage tanks last for 25-30 years. New tanks are designed
to last longer than that. And remember that the oil in your
tank is also like having your money in your bank.
With a few thousand dollars riding on your existing oilheat
system, now tack on the costs of removing the existing system
and replacing it with, for example, a natural gas system if
natural gas is an option in your area. Depending on the size
of your home, some new installations can run as high $5,000
to $6,000.
Add the cost of removal and disposal of the storage tank
(many states require that this be handled by licensed contractors),
and your up about another $2,000 in out-of-pocket costs.
Clearly, a prudent consumer would want to weigh the question
of switching heating fuels carefully with as much as $6,000
or more in the balance.
Where are energy prices headed? With as much as 40% of the
price of a barrel of crude oil attributable to rampant and
unfettered manipulation, unsupported by few if any fundamental
reasons, fuel could very well be a the top of the roller coaster.
All major energy sources are traded as commodities [natural
gas, electricity, heating oil], so all have been and continued
to be effected by speculative-driven increases we are trying
to get the Congress to pay more attention to.
Regardless, we know that, over time heating oil has a steady
track record of being the least expensive heating choice in
most markets. We also know that natural gas prices are at
surprising lows now – some say because natural gas supplies
are high after an unusually cool summer, still others say
because regulators are keenly focused on natural gas commodity
trading in the wake of allegations of manipulation. Natural
gas prices hit historic highs two years ago [$14 a mbtu],
and there are no guarantees that natural gas won’t be
the next energy to run into price volatility again, while
the call for increased scrutiny of petroleum trading –
see closetheenronloophole.com – could help bring the
price of oil down.
Moreover, the heating oil industry has survived two world
wars, a global depression, recessions, an Iranian fuel embargo,
unprecedented hurricane damage, and more. And the few price
fluctuations heating oil has seen in the past have not lasted
long.
If history tells us anything, it’s that ponying upwards
of $6,000 today to switch horses midstream in the home heating
arena is about as far from a sure bet as it gets. Stop. Take
a deep breath. Making a decision on weeks worth of price data
instead of decade’s worth of price data is doesn’t
make sense. We can help you control your energy costs, reduce
emissions and your carbon footprint and save you money today.
See http://www.icpa.org/ConsumerInfo.htm
The author is Eugene A. Guilford, Jr., Executive Director
of the Independent Connecticut Petroleum Association and former
Chief of Staff to the General Counsel of the U.S. Department
of Energy.
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