The cost of oil is rising and will continue to rise. At what price do we say enough is enough and abandon oil as a home heating fuel? That’s a decision that each person has to make. Do governments have a role to play in ensuring warm homes via reasonable heating choices in Canada? Most of us would say yes.
Governments may be still unaware of the nature of this emergency. They can recognize hurricane or flood damage. If there were no fuel it’s would be easy to understand. But rising prices can be tricky. Is it a permanent condition? How bad will it get? The funny thing is that world oil production hasn’t even started to decline yet. It’s just a little less than demand. Imagine when the real decline starts. So let’s talk about our vulnerabilities.
80% of homes in PEI, 25% in New Brunswick and roughly 65% of Nova Scotia use oil as the heat source. Approximately 1.3 billion liters of fuel oil are burned each year in Atlantic Canada. At last years price of 91 cents, that was $1.2 billion. At present day prices of $1.43 / liter, the new bill is $1.86 billion, a difference of $660 million. Next year, who knows? If families locked in a good price last fall, the sticker shock will only hit them later this year.
Over the next few years there will be a large-scale migration from unaffordable oil to other sources of heat due, as peak oil becomes a reality. There will be a burning platform with people diving to another fuel. The key question is what the alternate heating source will be and what are the implications of this massive shift?
First of all, we should realize that the limited Enbridge network will provide little relief outside of portions of Fredericton, Moncton and Saint John. Unfortunately, Efficiency NB hasn’t existed long enough to make a dent in the efficiency levels of our antiquated housing stock. Elizabeth Weir and Enbridge recently announced that they are contributing $2250 / $7,000 towards a $10,000 per person conversion program from electric heat to natural gas.
To put our oil refugee’s plight into perspective, 1.3 billion liters of fuel oil is equivalent to 11.5 billion kWh’s or 11 times the annual usage of Saint John Energy. It is 61% of the output of NB Power’s system. The peak that it would create on the Atlantic grid would be 2500 MW or more, which is equivalent to four new Lepreau 1 units or 2.5 units of the new AECL 1000.
Looking at a wood alternative, we would have to cut 2.8 million cords of wood to replace this volume of oil. To compare, the existing residential usage of hardwood in New Brunswick is roughly 500,000 cords each year.
But what about New Brunswick? My guess is that 60,000 homes are heated with oil. Assuming an average usage of 2500 liters per home, that’s 150 million liters or $214 million out of NB consumers pockets annually at today’s price. The replacement of this energy by electricity would require 1.4 billion kWh’s, from a power station of 420-Megawatt capacity, which is similar in size to the Belledune coal station. Note that this oil is consumed in the winter causing a large peak load. The cost of Belledune plant was $1 billion, if I remember correctly.
Francis McGuire, chairman of NB Power’s board indicated recently that even if the private sector doesn’t build Lepreau 2, then NB Power could proceed on it own by 2022. Has NB Power considered where New Brunswickers using oil heat are going to jump when the price of oil is $250 a barrel? Last time, it was towards NB Power. How would NB Power make up for the kWh shortfall? By burning heavy oil at Coleson Cove at a loss?
Jack Keir, Minister of Energy, has been suggesting Lepreau 2 as an economic development tool leveraged by private investment. Are the promoters presently waiting for government to meet some conditions? It’s a moot point as its completion date is too far into the future for application to the present problem.
Using wood as a solution requires an additional 332 thousand cords to be harvested annually to displace the New Brunswick fuel oil requirement. This shouldn’t be a problem with mills shutting down. Pellets and briquettes can use softwood that is compressed to provide the same heat density of hardwood, with less moisture content.
Wood heat could very quickly meet the requirements of a conversion program. The reduction of oil purchases of 943,000 barrels would retain $137 million a year in the New Brunswick economy as opposed to sending it offshore. Over the years, this would be the equivalent of investing over a billion dollars in the local economy. If Efficiency NB extended their offer of $2,250 to oil heat customers converting to wood, it would go a long way toward alleviating the problems of oil prices. The cost of the providing stoves would be $135 million (60,000 x $2,250), probably spent over a number of years.
The use of EPA rated stoves ensures an efficiency of 70% and emissions that are less than 10% of previous generation stoves. In urban areas, the use of pellet or briquettes may have to be mandatory with round wood as a rural option.
We are at the beginning of an emergency, perhaps a low intensity war. This change from low cost energy to high cost energy will sap our resources, leave us poor and eventually cold. If we fail to adapt to the heating oil challenge as well as the other aspects of peak oil, we lose. Do you see the leadership that we need to ensure that we don’t freeze in the dark?