Heating oil vs. natural gas
Oil is bad for environment and costs too much
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.
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.
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.