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What Price Warmth? Heating Oil Up, Natural Gas Down

As heating oil prices go up, many in Middletown have no access to natural gas, and hence no choice but to keep on forking over the dough.

As the New England winter hits mid stride, the price of heating a home comes to the forefront. Energy experts say heating oil prices this winter will be the highest ever, while natural gas prices will come down a little.

According to a recent New York Times article, the cost to heat an average home in the Northeast this year with heating oil will be as much as $2,300, while heating the same home with natural gas will be $700, and with electricity $950.

But in Middletown, if you live on a street with no gas main line—like I do—you may have no choice but to keep paying the high price for heating oil, which is averaging $3.81 per gallon this week, according to the State of Rhode Island Office of Energy Resources

“As you get down into the lower elevations in Middletown, where there is a higher water table, those are typically the areas of town where there is no gas service because of the potential for flooding the gas main,” says David Graves, media relations officer for National Grid. “Also, there are some housing areas that have been built where the developer decided not to have gas made available.”

Graves said National Grid has 7,900 electric customers in Middletown (6,500 residential, 1,400 commercial), but only 3,000 natural gas customers, possibly a reflection of how much of town does not have access to gas lines.

Ouch! $22,721 to install a gas line on my street

Even if you live in a part of town where flooding is not an issue, installing gas lines may be impossible because of the expense. For example, in my particular case—a dead end street off of Miantanomi Avenue—National Grid said a 275-foot-long, 4-inch gas main extension down my street would cost me $22,721. The company does not pay the cost of running new gas main lines, because the construction cost is so high, it takes years for the company to recoup the costs, according to Graves.

As a consumer, I certainly can’t afford the $22,721; even if all five of my neighbors decided to go in on it with me, it would still be an expensive outlay—and that’s just to run the gas line down the street.

To switch away from heating oil also requires a new furnace/conversion, which homeowners typically only consider when an existing furnace is getting old. A plumbing contractor estimated it would cost me about $9,000-$10,000 to do a conversion from heating oil to natural gas—i.e., buy a new high-efficient boiler that runs on natural gas, and install all the tie-ins, including the one-time $800 charge from the gas company to tie in to my house from the street (that would be after I paid for the $22,721 line to be in the street in the first place).

By comparison, to simply replace an existing boiler with a new one that uses heating oil would cost $5,000-$7,000.

One other option is propane, which simply requires a tank—either above ground or underground. Propane is common in many other parts of the country as a home-heating source, and it’s starting to become more popular here because of its efficiency. “No one is putting in oil heat anymore,” says Peter Sherman, president of . “It’s either natural gas or propane. Propane heating systems are so efficient compared to oil,” he adds, noting that new propane systems are as much as 98% efficient.

An average 2-story, 1,800-square foot, well-insulated house might require 600 gallons of propane per year, according to Sherman, and that would translate to about $2,000 per year; the price of natural gas is currently $3.24 per gallon. A new boiler/conversion would be required to switch from heating oil to propane, just as it would be to switch to natural gas.

Sigh. Looks like I’ll continue my Yankee frugality at the thermostat for now—or prop up my feet on the ottoman next to the hearth and throw another log on the fire.

What about you?

Are you hounded by heating oil prices? Caught on a cul-de-sac with no gas line? Or have you simply developed coping methods that help you stretch every drop of heating oil in the tank? Tell us your story.

Good Year February 06, 2012 at 03:12 PM
I always thought oil prices were a result of supply and demand. With this exceptionally mild winter, you would think that oil prices would be down.
Jill Connors February 06, 2012 at 03:27 PM
@Good Year: That would be logical, wouldn't it? According to the Energy Information Agency's (www.eia.gov) "Winter Fuels Outlook," which came out in October 2011--before we were in this mild winter--heating oil prices were forecast to be 10% higher this winter than last. That seems to be holding true, e.g. the RI Office of Energy Information has $3.81 per gallon for this week's average heating oil price, versus $3.41 average per gallon for the same week in 2011.
Robert E February 06, 2012 at 04:08 PM
Good Year oil prices are a result of greedy oil companies wanting to make higher profits. They know we don't have a choice and gouge us every chance they get.
Craig February 06, 2012 at 04:43 PM
Home heating oil was $3.81 this week!? Check out www.smartclickenergy.com, their current price for Middletown is $3.58 for 200 gallons. Check out their site and see if you could save yourself the amount of money that I have been able to save myself this winter..
Jill Connors February 06, 2012 at 05:12 PM
@Craig: Thanks for the info re smartclick! Note: $3.81 is the average price per gallon this week, per the RI Office of Energy Information; the low this week is $3.44, the high is $4.44. Also, I wonder what the smartclick price is for 100 gallons?
Chip Leakas February 07, 2012 at 12:34 PM
I cannot tell you how fortunate I feel to have been able to convert to Natural Gas last year! I purchased my home in 2009 with a 25+ year old oil boiler that was extremely inefficient! I think the annual heating costs were over $3,000/year for a 1200 square foot cape cod style home. The contractor and National Grid said it would take between 6 to 8 weeks to get the gas line installed. The only complaint I have is that it took 4 months (twice as long!) to get the gas line installed. Also, RIHousing offered a 20 year fixed rate loan at 4.75%! With fixed monthly payments and level billing, I will recover the cost of the boiler in about 5 years, and have improved the sale-ability of my home. I strongly recommend anyone that has the opportunity to convert to natural gas to find out if gas is available on your street! It's a great relief knowing I won't have to shell out $800 to fill the oil tank several times during the winter months!
Patti Dillon February 08, 2012 at 08:15 PM
I work for Anchor Fuel, a local home heating oil provider. I think people would be surprised at what little role the weather plays in the price of heating oil. Global demand however may have a big impact as suggested by the Washington Post on Feb 7, 2012. The expectation of a second bailout for Greece is driving crude oil prices up according to Reuters Feb 8, 2012. "Crude prices are estimated to rise significantly if Iran implements its threats to close (The Strait of) Hormuz.." Boomberg.com, Feb 8, 2012. Don't like the prices you're paying for heating oil? Contact your local politicians and ask them to support new legislation that was intoduced in Congress on 9.22.2011. According to NEFI said legislation would dramtically scale back the role of unchecked financial speculation in the energy trading market. Want to save money on your heating bills? Consider upgrading your older system rather than converting. According to the CECA " Energy efficiency investments are by far the best economic choice for consumer." Have more questions? Give us a call 401.619.2222, we're here to help.
Kat February 08, 2012 at 08:20 PM
I am in the same boat you are concerning switching from oil to gas, although I do have gas on my street, and even have a gas stove and gas hot water heater in my house. The issue for me is that my house (a.k.a. the money pit) is 75 years old and has steam heat. Gas does not push steam well, does not get as hot as an oil burner. Gas is called a "lazy" heating source. I would have to change to a basboard system with a return, forced hot air or hot water, which my radiators do not have now. VERY expensive conversion. However, what I do plan to do, since I have a fireplace in the livingroom, is add a heat generating gas log unit. We will tie into the gas line already in the house, hopefully this summer. It will easily heat the first floor, and I am hoping I won't need much heat from the oil burner even for the 2nd floor bedrooms. How frustrating it is to have go to a fireplace alternative! Pretty sad, and a black eye in my opinion on our government that we are being held hostage by heating oil and gasoline for our cars!!
Mike Rudge February 14, 2012 at 05:16 PM
I work for Osterman Propane and one point this article did not mention was the ease with which one can switch from oil to propane. We have an entire website (www.oiltopropane.com) devouted to explaining the process. In areas where natural gas is not available, we hope that you think of propane as a viable alternative.
CD September 27, 2012 at 02:37 PM
I have steam radiators too - but will convert to gas without changing to baseboard. What you (may) have forgotten to consider (in my opinion) is that steam radiators have the ability to radiate heat longer than baseboard when the thermostate has turned off. As a result (having lived in two houses - one prior with baseboard/gas, and now one with steam/oil) I will take the old steam radiators hands down any day over the baseboard. In other words I am counting on the fact that the steam radiators are a better source of heat than baseboard - and will compensate for gas's inability to heat as well as oil.

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