OIL AGAIN THE “CHEAP HEAT” IN NH — FOR THE SMART BUYER

When our family entered the NH Oil Heat Service Market 60 years ago, #2 Heating Oil was $0.135 a gallon! It had replaced virtually all other fuels despite poor heating equipment in un-insulated buildings. In these succeeding years we participated in the evolution of heating appliances and fuel preferences. All the while we have witnessed technical development being compromised by economic and regulatory policies. Fortunately recent developments in fuel extraction have overtaken market manipulation and put things back into perspective.

Referencing our prior Heating Blog entitled “Heating Fuel Selection — From An Engineer’s Perspective” will provide a base to qualify our further arguments. Briefly, physical characteristics of heating fuels, in particular “energy density”, physical state (gas, liquid or solid), processing & handling characteristics predetermine their viability and effectiveness. Understanding fuel properties will guide you into what we can now refer to as “The Perfect Storm” that has developed in our region, and may be applicable in others as well.

Understanding the difference between “distributed” and “delivered” fuels is paramount. Simply, a distributed fuel is piped or wired to your building (electricity, natural or city gas) while a delivered fuel is physically dropped at your location (coal, oil, propane, wood, etc.). Distributed fuels are typically single-source provided while delivered fuels are openly competitive. Heating oil is the highest energy density liquid fuel within a competitive and somewhat volatile market (until recently) and thus presents the “smart buying” opportunity. We will demonstrate that #2 Heating Oil far surpasses ALL other heating fuels when properly sourced. Yes, including Natural Gas.

Whether its gasoline, diesel or heating oil there are many participants in the petroleum fuel products market and competition is keen. Note the number of heating oil companies represented in your area. They are like the varied gasoline stations, but on wheels. The only visible difference can be the size of a particular fuel company and its operating area, but the fuel distribution market is changing, and rapidly.

NOTE: As a matter of policy we do not reveal specific identities of our sources, organizations and participants.

Here in Northern New England we have an expanding presence of a Canadian-based “vertically-integrated” Refiner/Distributor. Their combined advantages of excess refinery capacity, direct transport & distribution, a weakening Canadian Dollar and lowering feed-stock pricing makes them a formidable competitor indeed. Although we have not researched it, similar current or potential situations could exist in the Mid-Canada-US Region as well.

As an individual user in a prolific supplier market you have little buying leverage excepting to “gang up” as Buying Clubs, Co-Ops, etc. and purchase aggressively. Only in so doing can you move into the ‘Big Boys Club” and attain “rack pricing” as it is referred. The buying groups are out there, but they vary in scope and effect. Do your homework well, in particular to the terms of affiliation with both they and their subscribing suppliers. Making the leap from “Good Old Joe” my local oil dealer who has “kept me warm” (at a price) can be a daunting one to an unknowing consumer, so let’s put some numbers together to make things more exciting.

We use the NH-OEP Fuel Prices Page, published weekly and loaded into the NH Climate Audit Calculator (typically updated monthly) as the basis of our comparison. Loading our daily Co-Op #2 Heating Oil Price we obtain the “Price per Million BTU”, then adjust all the other Fuel Unit Costs to equate. To obtain an “apples-to-apples” comparison we use the average of latest generation heating appliance efficiency (AFUE) for oil & gas as 87% and 95% respectively. The resultant Fuel Unit Costs are the equivalents to oil-generated heating energy. The “distributed fuels” (gas & electricity) must be factored to your total bill for actual fuel cost + distribution/services.

Fuel TypeFuel Unit CostUnit of MeasureHeating Unit EfficiencyPrice per Million BTUBilled Cost MultiplierFinal Fuel Unit Cost
Coal215Ton7910.92
Fuel Oil (#2)1.3186Gallon8710.93
Natural Gas1.038Therm9510.931.3 (Estimated)0.7984
Propane0.948Gallon9510.93
Wood126.70Cord5810.93
Electricity0.036kWh9910.921.85 (Estimated)0.01946
Wood Pellets144.30Ton8010.93
Kerosene1.15Gallon7810.92
Geothermal0.102kWh27510.921.85 (Estimated)0.0551

Go to the NH Climate Audit Calculator and substitute your own values for fuel cost, efficiency, multiplier (where applicable) to ascertain your personal numbers. Only if we substitute our statewide fuel oil average cost which appears to be affected by “pre-buys” can we even approach a par with natural gas. My how times are changing!

Looking forward it bares noting that the appliance efficiency differential between oil & gas seems to be closing as well. Selective gas appliance manufacturers are claiming AFUE’s of up to 97% while “oilers” are nearing 90%. While gas is nearing its zenith oil has a ways to go. We are watching recent advances in higher temperature combustion oil burners and initial results with cleaner “Bio-Heat Fuel” as examples. We will advise as worthy.

Our personal soon-to-be-published efforts applying Delta-T Hydronic Distribution will benefit ALL heating systems. To quote JFK, “a rising tide lifts all boats”. The sailing ahead should be smoother …..