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Batey Reports Price of Oilheat Has Averaged Lower than Natural Gas
How do you battle the utility ads that claim natural gas is a better value than Oilheat. Show the consumer the facts as supplied by the Energy Research Center Inc. (ERC)!
The Easton, Conn.-based company has published a report illustrating that, including the recent volatile price activity, the average price of residential heating oil has been lower than the average price of residential natural gas over the past five years for the entire Northeast.
In his report ERC President John Batey, P.E., compares residential heating oil and natural gas prices based on data published by the U.S. Department of Energy's Energy Information Administration (EIA) using average statewide prices for oil and gas.
The states studied were Connecticut, Maine, Massachusetts, New Hampshire, Rhode Island, Vermont, Delaware, Maryland, New Jersey, New York, Pennsylvania, Washington, D.C., and Virginia.According to the report, the five year average price for heating oil was $0.92 per gallon as compared to an average price for natural gas of $1.14 per gallon equivalent.
Over ten years, the average was $0.95 for oil and $1.07 for natural gas. While over the last 15 years, the average price for oil was $0.93 cents and $1.02 for natural gas.
According to Batey, "The primary conclusion of this study is that although residential oil prices increased rapidly from near historic lows, they are now returning to more moderate levels. Homeowners should be advised to compare annual, five-year, 10 year, and 20-year heating costs when comparing fuels and not just current prices before considering fuel choices."
The report also documents the positive impact energy conservation programs, including the installation of more efficient equipment, have had on fuel consumption over the past 25 years.
Consumption by the average homeowner has decreased from 1,600 gallons per year in 1971 to 900 gallons per year in 1999.
Oil price data through February 21, 2000 is included in Batey's analysis that incorporates the recent increase in oil prices which occurred between mid-January and mid-February of this year.
Figure 1 shows that the average price of oil sold to homes is $0.981 per gallon for the period from March 1999 through February 2000 (which includes the recent price increase). This is lower than the average price of residential natural gas for the 13-state region over the past five years.
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* From ERC; Source, Petroleum Marketing Monthly, DOE/EIA-0380 (00/03)
"Homeowners should be advised to compare annual, five-year, 10-year and 20-year heating costs when comparing fuels and not just current prices before considering fuel choices."
History has shown that both gas and oil prices can vary from month to month, and the mid- to long-term trend determines what a homeowner actually pays for home heating.
Figure 1 also compares the most recent prices for residential heating oil (March 1999 through February 2000) to the average prices of oil and natural gas over the past 5-, 10-, and 15-year periods.
This chart clearly demonstrates that home heating oil has been substantially lower in cost than natural gas in the 13-state region for more than a decade and a half. Homeowners in the region studied have saved $1,193 over the past five years by using oil instead of natural gas Recent price fluctuations have normalized as the outdoor air temperature returned to normal, and heating oil supplies increased to meet the space heating demand.
Figures 2 and 3 tabulate the average monthly oil and gas prices for a 17-year period in dollars for an energy content equivalent to a gallon of oil.
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The following averages are presented:
- 5-year Average Prices: $0.923 for oil and $1.14 for gas
- 10-year Average Prices: $0.945 for oil and $1.07 for gas
- 15-year Average Prices: $0.929 for oil and $1.02 for gas Note that oil has been lower in price than gas for each of the periods shown.
The recent oil price increase that occurred in mid-January has reduced the cost savings produced by using oil compared to natural gas for the 13-state region that was studied. However, the average price of oil over the past 12 months remains lower than the comparable price of natural gas.
Long-term trends and future price changes must be carefully examined before advising homeowners about fuel switching. Past price trends with oil show that a sudden increase can be followed by periods of decreasing prices, such as the period after the Gulf War, when oil prices dropped steadily by about 19 percent over five years (1991 to 1995).
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Note: 1999Natural Gas Prices are Averages for Only Part of the Year
* From ERC; Source, Natural Gas Monthly, DOE/EIA-0130, USDOE,
Historic Natural Gas Annual - 19301998
Natural Gas: 1,030 BTU Per Cubic Foot
Fuel Oil: 138,690 BTU Per Gallon
Reprinted from Oil & Energy Magazine, May 2000
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