Six Good Reasons to Stay With Oil Heat
Elizabethtown Gas has been actively encouraging members in Lake Mohawk to commit to converting to natural gas. Here are six good reasons to stick with oil heat:
1. While Natural Gas is currently cheaper than Heating Oil, Liquefied Natural Gas (LNG) exports will quickly cause this price difference to disappear.
Heating oil and natural gas are fungible commodities. Over a 75-year time horizon, the price of heating your home with oil or natural gas has been pretty much in parity with an occasional small tilt in one direction or another. In 2006, as a result of the advent of fracking and horizontal drilling, the long term equilibrium between the prices of the two fuels changed. These new technologies resulted in huge increases in the domestic production of both fuels. Natural gas production increased from 19.4 trillion cubic feet in 2006 to 28.8 trillion cubic feet in 2017 and crude oil production increased from 5.1 million barrels a day in 2006 to 9.4 million barrels a day in 2017. These massive increases in US production caused the prices of both fuels to decline. However, the price of natural gas declined more and has stayed down longer. Why? The simple answer is that it's easy to place the extra oil on a tanker and ship it to other parts of the world where the price is higher. Until recently, this phenomenon was not possible for natural gas which was essentially "shut in" in the domestic market. A new technology known as liquefied natural gas (LNG) converts the natural gas into a liquid so that it can be shipped to other parts of the world where prices are higher. The first two domestic LNG plants commenced operation in February 2016 (Cheniere Energy's Sabine Pass Facility) and March 2018 (Dominion's Cove Point Facility). An additional 5 plants are under construction and 4 more are approved and waiting to begin construction. From 2016 to 2017, US LNG exports quadrupled from .5 billion cubic feet per day (Bcf/d) to 1.94 Bcf/d. By 2019, US LNG Exports are expected to quintuple to 10 Bcf/d. Over the course of a year that’s enough natural gas to heat 36.5 million homes. This steep increase in LNG exports will eventually eliminate the overhang of natural gas causing US prices to rise, restoring the historical price equilibrium between the two fuels.
2. It is unlikely that you will ever get a return on your conversion investment.
The Gas Company estimated the cost to convert to be about $12,000 with a payback of the investment in approximately 6 years. As LNG exports ramp up and natural gas prices increase, you may never get your money back.
3. Heating Oil is safer than Natural Gas.
Natural Gas is highly flammable and explosive at room temperature. Heating oil is combustible, not flammable and won’t burn unless it is heated to 140 degrees F. If you throw a match in a can of heating oil the match will go out. If you throw a match in a can of natural gas it will explode. On September 13, 2018, as many 80 homes in the suburbs north of Boston were damaged or destroyed by natural gas piped to their homes. Miraculously only one person was killed but scores of people were injured. Over 8,000 people were evicted from their homes with no timetable as to when they could safely return. “It looked like Armageddon, it really did”, said Michael B. Mansfield, the Andover, Massachusetts fire chief.
4. Heating oil makes hot water faster than natural gas.
Because of its higher flame temperature, the average oil fired hot water heater makes 120 gallons of hot water per hour compared to 40 gallons per hour for the average natural gas water heater.
5. Choice of service provider.
As a heating oil customer you can choose to do business with any number of independent family owned dealers who are anxious to please you. If you are unhappy with one, you can “fire” them and choose another. If you are a natural gas customer, you have to do business with a big impersonal utility.
6. Environmentally friendly.
In the last 5 years the sulfur content of heating oil was reduced from 2000ppm to 15ppm making it an ultra-low sulfur content fuel. These changes significantly reduced the emissions of SO2, NOx and CO2, making heating oil a “green fuel”.