• Tag Archives Distributed Fuel
  • 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 …..


  • USING A ‘HEATING COST CALCULATOR’ — CAREFULLY!

    A ‘Heating Cost Calculator’ is a very useful tool to compare the costs of various heating fuels. They typically convert each fuel into a “cost per million BTU’s’, the accepted industry common denominator. Additionally they usually allow varying input data to suit your particular situation. All well and good.

    For reference please use the following links to follow this discussion:

    Note: These are NH Sites (our locale). Similar ones should be available in your area, or adapt these.

    The NH-OEP Home Page (first link) has a listing of current average fuel pricing in our area, dated and updated typically weekly. You will note these in the right column table on this page. The values are automatically downloaded into the Heating Cost Calculator (second link) in the Fuel Unit Cost column. The Heating Unit (assumed value) Efficiencies are displayed and the net Price per Million BTU displayed. Very nice.

    Now you can ‘play the numbers’, selecting only those fuels of interest and availability, their local costs by solicitation, and applying your current and proposed heating appliance efficiencies. If only it was this easy.

    Unfortunately both of these variables (Fuel Unit Cost and Heating Unit Efficiency) are not so clearly definable as we would assume. Let’s look at each one.

    Fuel Unit Cost is the cost per respective unit of measure for that particular fuel. (A Gallon of Oil, A Cord of Wood, A Ton of Coal, A Therm of Natural Gas, etc.) We assume that it is the cost at your door, in your tank, through your pipe, etc. This is not necessarily so, particularly depending upon the type of fuel.

    We must make a distinction immediately between a ‘DELIVERED FUEL’ and a ‘DISTRIBUTED FUEL’. A ‘Delivered Fuel” is one that is physically transported to your door vs. a ‘Distributed Fuel’ that is ‘piped’ through an external network. Natural Gas and Electricity are ‘Distributed Fuels’, the others are not. So why the distinction?

    Distributed fuels are subject to other charges beyond their ‘unit cost’ and is the prompting for this writing. One of our customers is seasonally forwarding his Natural Gas billing that includes:

    1. The Cost per Therm, the number of Therms and the extended cost. (His ‘Gas Bill’.)
    2. A Minimum Daily Service Charge, regardless of usage.
    3. A significant ‘Distribution Charge’, presumably wear and tear on the pipes(?) (He operates a Weil-McLain Ultra Condensing Gas Boiler and 60 Gallon Indirect Water Heater at 93 to 98% (winter to summer cycles) in an older 3-Bedroom Cape, located in Central NH — about 7,500 Degree-Days, current year.)

    Annualized Monthly Natural Gas Bill Summary: Summer (August) Billing: 55% consumption and 45% ‘other’ charges. Winter (January) Billing: 70% consumption and 30% ‘other’ charges. Estimated Annualized Burden: Approx. 33%

    LESSON: Multiply Quoted Natural Gas ‘Per Therm’ Cost by 1.3 (Winter) or 1.45 (Summer) to reflect the actual seasonal cost per therm!

    SUGGESTION: Get an estimate of annual fuel costs based on projected energy usage from your supplier(s) before commitment.

    DISCLAIMER: We install and maintain Natural Gas, Propane and Oil-Fired Systems and have no personal interest excepting to advise the consumer.

    We have not looked at electricity in this light since we have particularly high electric costs regionally, thus electric resistance heating and heat pumps are not popular in the frozen north. But in it’s case you should back out items like ‘stranded costs’ and the like to get to a true energy efficiency calculation.

    Heating Unit Efficiency is our second variable in the Table and should be entered for your present appliance vs. other options, or if new construction only vs. the various options. How do we do these effectively?

    The new appliance efficiency number is easy. Enter the AFUE (Annual Fuel Utilization Efficiency) percentage stated by the manufacturer. (We presume in selecting powered appliances that you are only opting for ‘Energy Star Rated’ equipment. Link: http://www.energystar.gov/index.cfm?c=heat_cool.pr_hvac)

    What about your present appliance? If it’s fairly new it may have an AFUE value on the Specification Tag or Label. If it’s ‘old enough to vote’, then it’s a different matter.

    Many Heating Servicemen leave a Service Tag that denotes date, service items, notes and an ‘Efficiency’ calculation. You will see Draft, CO2 and Smoke values converted into an ‘Efficiency’. CAUTION! This is a ‘BURNER EFFICIENCY’ value and NOT ‘APPLIANCE EFFICIENCY’ as an AFUE value would reflect.

    To arrive at an Appliance Efficiency for your older system would require converting ‘Exhaust or Stack Temperature’ of the exiting gases and relationships between heat exchanger areas vs. firing rates, etc. This is not the stuff you have available at the Serviceman Level to ascertain the equivalent of an AFUE. These are derived on Test Stands in Laboratories.

    Suffice to say that your Service Tag Efficiency is NOT your Appliance Efficiency. Rule: The higher the exhaust temperature, the poorer the efficiency. As exhaust temps go up, efficiency drops dramatically! We won’t and can’t quote numbers, but look at new appliance specifications and take it from there.

    We trust the enclosed will help you to make better fuel and appliance decisions.

    Last Edit: 5/14/2012 pdm