What will you burn this winter?

How are you going to heat your home this winter? If you’re heating your house with oil and about 25% of New Brunswickers do, you may have noticed that the regulated price of fuel oil is up to a maximum of $1.43 per liter. That’s quite a change from June 2007 when it was 57% lower (91 cents per liter).

What would be a good forecast (guess) for next year’s price? At this moment the world supply doesn’t quite meet demand so the price is trending upwards. It may reach as high as $1.80 per liter and perhaps as low as $1.20 if we get very lucky.

First of all, the recent announcement by the Saudis that they would open the tap by 500,000 barrels a day didn’t drop the price. The increase is only ½ of one percent of the daily supply, it may be heavy crude that not all refiners want, they probably can’t turn the tap any further and certainly no one else can. It may be time to review your options.

Could your house be more efficient and use less energy? Perhaps an energy audit by Efficiency NB is in order. If you could save 25% on your costs, it would stabilize your bill for a short time. They’re waiting for your call and want to help you.

I like to use examples and real numbers to illustrate costs. Let’s assume a home that takes 80 million BTU’s annually to heat. Your house may use more or less fuel depending on size, insulation level and other factors. The costs of different methods are:

Oil – With an 85% efficient furnace, 94 million BTU’s are required, which is 2580 liters. The cost last year (at $.91) would have been $2,347, at $1.43 it would be $3,689 and next year it could be $4,644 or more. Some people lock in their oil rates and this can be helpful when rates are rising. Adding up your liters from the fuel company bill can let you know how your house compares. In the next five years, the cost of fuel oil will increase greatly and make it too expensive to use to heat your home. The only question is how quickly does that happen and what can you do?

Electric –80 million BTU’s divided by 3413 is 23,439 kWh’s, which at the second block rate of $.0861 would cost $2018 per year. The rate structure is changing soon and the second block will be same or higher than the first block. As well, NB Power burns a lot of heavy oil, natural gas and coal, which are all rising in price. When the retrofit of Lepreau is finished in 2010, the $1.4 billion cost will be part of the annual debt repayment and cost roughly $140 million per year. That’s a 14% rate increase.

But using oil, natural gas and coal to create electricity to space heat is not as efficient as burning at the source and should be discouraged, perhaps by installing a carbon tax on the fuels of NB Power that create CO2. Electric heat also causes a peaking problem, which cause additional power plants sooner than if other heating options for residences were used. It’s an unfortunate fact that low electric rates attract heating customers and fear of public revolt prevents rate increases to properly price electricity for conservation, environment and future energy shortages.

Natural Gas – The gas distribution network is new and not yet everywhere in New Brunswick. In fact, will it go beyond the major centers in the golden triangle? Given an 85% efficiency furnace, we would require 94 million BTU’s or 99 GJ. For those converting from electric to gas, the cost of the Enbridge SGSRE rate would be $1872 per year ($1401 for the gas, $279 for delivery and $192 service charge). For those converting from oil, the SGSRO rate applies and you would pay $2557 ($1401 for the gas, 965 for the delivery, and 192 service charge). Enbridge prices their delivery charge based on the competition and loses money on electric heat customer conversions to build a customer base. Because natural gas prices track oil to some degree, we can expect the gas price to climb rapidly so that it will be higher than electric at some point. Gas supply is declining in North America so LNG from offshore countries will be essential as a supply source. How secure and price stable are those countries?

Wood heat – The old standard for many people is wood heat. In this case, with a 70% efficient stove, we would need 114 million BTU’s. A cord of hardwood would provide at least 20 million BTU’s to be conservative, so we should buy 6 cords. If it costs you $200 per cord, then that is $1,200 each year. There is a considerable investment in time and energy involved with wood – stacking, moving it to the stove and tending the fire so it’s not for everyone. The use of an EPA rated stove is recommended for round wood as it reduces the smoke to 10% (2 – 5 grams / hr) of previous stoves.

Some prefer the convenience of wood pellet stoves, which have automatic feed mechanisms. They could be delivered by truck and blown into a container in the home as it is done in Europe. Briquettes are another option providing consistently dry wood that burns with little pollution, no insects and is a stackable product. Manufactured items like pellets or briquettes are more expensive than split round wood.

I’ve considered heat pumps to be in the electric category as they are essentially electric in the coldest weather. Geothermal systems provide low annual costs, but are very expensive in the front-end installation resulting in fewer users. Solar collector heating as well hasn’t yet developed a prime time audience.

Is there a constructive role for government in assuring warm homes in this province? Nobody wants to see people freeze in the dark.

Advertisements

2 comments

  1. Larry · July 11, 2008

    Good article Roy.
    People need to realize that when it comes to saving on home heating costs they should focus on cutting down on the BTU’s required rather than on the price of a particular fuel or expensive conversions.

  2. Rob · July 28, 2008

    If our intention is to lower CO2 emissions, the provincial and federal governments should be encouraging our natural gas infrastructure. A NG boiler produces ~30% less CO2 than a fuel oil boiler, and more than 2 times less CO2 than electric space heaters.

    I live in Fredericton, but I cannot get NG. I’ve been told by Enbridge not to hold my breath for availability in my particular area of town. Until then, I’m stuck w/ my oil boiler.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s