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Energy Answers Today

History Shows That Price Advantages Don't Last


Family Paying Bills When energy prices rise, it's natural for people to look around for money-saving opportunities, including the option of switching from one home heating fuel to another. A full-blown system conversion might sound like a good idea when one fuel has a much lower price, but history has proven that these advantages are fleeting. In fact, over the last twenty years, the costs for Oilheat and utility gas have tracked each other closely, with Oilheat being the better value for most of that time.*
(*Source: Energy Information Administration)


Money Magazine reports that upgrading an Oilheat system could "save you more money than any other home improvement project" and concludes that "the cost of converting would probably be higher than the savings." Indeed, money spent to upgrade a heating system or replace it with a modern, high-efficiency model can reduce fuel consumption by 40% or more. Manufacturers' rebates and local, state and federal tax incentives may also be available when upgrading.

One major difference between Oilheat and utility gas is that Oilheat is sold and delivered by independent distributors who must compete for your business by offering the best possible value and service. Utility gas is sold by large, monopolistic companies that are sheltered from intensive price competition.

• Price. Oilheat has been the less expensive heating fuel for most of the last 20 years, according to the U.S. Department of Energy. Prices for Oilheat and natural gas have followed each other closely through the years.*
(*Source: Energy Information Administration)

• Billing charges. Billing varies considerably between Oilheat and utility gas. Oilheat is billed by the gallon, and the price per gallon is the "delivered" price, without any additional charges. Gas utilities charge by the "therm," and the bills generally include extras such as delivery charges and seasonal and usage charges. Some gas utilities also enforce monthly minimums. Utility gas bills can be so complex that some companies provide "how to" guides on reading their bills.

• Upgrade and save. Leading authorities such as the Consumer Energy Council of America and Money Magazine say that upgrading the home's Oilheat equipment is a better investment than switching to gas heat. Conversions are very expensive: customers who switch from Oilheat to utility gas pay for abandonment or removal of their oil tank, plumbing, electrical work, chimney work and ducting, laying gas pipe, and more - at a cost of between $6,500 and $10,000. (Boston Globe, August 24, 2008) Upgrading without converting costs much less and can yield fuel savings of up to 40% or more.

• Small changes, big savings. Every home, even those with newer, high-efficiency systems, can cut energy costs with easy, inexpensive improvements such as installing a programmable thermostat or additional insulation. A programmable thermostat can reduce fuel consumption by up to 5 to 10 percent. It is easily installed, and you adjust the settings so that the house is warmest when you and your family are up and about. When you're sleeping or away, the temperature is lowered automatically. You can save up to another 15 percent by tightening your home with insulation. If your system has a 15-year-old burner that doesn't have a sophisticated combustion head, upgrading to a modern flame retention burner could reduce fuel consumption by up to 17 percent.

• Tuned for savings. A simple system tune-up keeps your system running at peak efficiency and can reduce fuel usage by up to 5 percent.


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