OIL VS GAS

 


As we start to look ahead to the coming heating season, many oil dealers are telling me that they are hoping for a cold winter in order for them to stay in the fuel oil business.


Many say they are under the pressure of not knowing what oil prices will be. When I ask dealers about what they’ve seen so far, they tell me that in the upper New England area prices have already averaged a .55 cent per gallon increase from their suppliers, and it’s only September.


They even experienced a price drop in May and thought this was going to be the help they needed for their business and, of course, their customers. Believe me, now they are back to worrying because some of the full service companies have already reached the $4 per gallon price. Some say they are still working with their customers to collect money from the last heating season.


Several of these once only oil companies have taken the plunge and entered into the propane gas delivery and service business. I’m told these same companies are getting more calls for LP or natural gas conversions than ever before and that there seems to be some prosperity in this area. The real question is why? The answer is simply rebates.


In the upper Northeastern area there are rebates related to natural gas. I looked at the state of Rhode Island for an example to see what was offered for residential heating, and it seems that National Grid is this state’s prime promoter of rebate programs. They have rebates offered for high efficiency heating equipment, such as water heaters, programmable thermostats and weather sensitive outdoor boiler reset controls.


For example, some of these incentives are $18.75 for seven day programmable thermostats; $150 for outdoor boiler reset controls for existing gas customers; $450 for warm air furnaces with an AFUE rating of 96% or greater with an electronic commutated motor, also for existing gas customers. A rebate of $1,125 for gas hot water boilers with a 96% AFUE rating and $750 for anything 90% or greater AFUE rating is also available.


The units must also be listed on a designated website. They also offer a $1,000 rebate for a high efficiency heat pump electric water heater for anyone looking to replace an existing heater and reduce their electric expenses. In checking the price for one of these units I found it to be in the area of $980. The claim is that these units will save about $325 per year per household, depending on the KW rate. Not a bad deal, huh?


When I looked at the rebates for oil equipment for the state of Rhode Island, I found that no money has been allotted. However, I know that some oil dealers have created their own incentives, like a zero-down payment plan, 36 month financing and 0% interest. When I asked why they were doing this, one oil dealer said that he was trying to hold onto his customer base. Sounds like a local car dealer ad, but if it works, great.


When all is said, I guess the gas incentives win over the Btu value of fuel oil. The total heat value of propane after vaporization is 91,502 and No. 2 fuel has a Btu value of 138,000 per gallon. So when you’re figuring the total heating cost, remember these facts.


On another note, I would like to give a special thanks to my good friend and former Fuel Oil News co-writer John Griffin for his years of knowledge sharing. I wish him and Joan the very best in the years to come.

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