Heating Oil and Natural Gas Prices Up, Up, Up: An Overview of What to Do
Oct. 14, 2011; updated Oct. 21 — Oil vey! New York City heating-oil costs are getting meshugana!
OK, it's not really funny. Crude oil prices rose above $85 a barrel today [Oct. 14], the spike of a rise from $75 last week. The U.S. Energy Information Administration (EIA) says heating oil will cost 8 percent more this cold-weather season than last, while electricity heating expenditures will fall by less than 1 percent. In fact, the EIA expects average expenditures for oil heat to be higher than in any previous winter. That's right: higher than ever.
What to do? The first step is to assemble the facts. Then you can help your co-op or condo board make an accurate cost-benefit analysis of options like converting to natural gas or a dual-fuel burner; upgrading parts of your heating plant to more fuel-efficient components; or making the plunge to invest in green technology, which looks more and more like a necessary part of your overall energy sourcing.
The rising price of crude oil helped push its distillate heating oil up 4.79 cents today on the New York Mercantile Exchange (NYMEX), to $3.0193 a gallon. In September, when that NYMEX figure was lower, the average retail price was $3.819 in New York State, $3.975 in the Long Island region, and a whopping $4.033 in New York City, according to the New York State Energy Research and Development Authority (NYSERDA).
Don't go blaming the Middle East: Most people don't realize it, but the U.S. actually gets the vast majority of its oil — 51 percent — from right here in the U.S, according to EIA figures as of April 2011. That's far more than the roughly 40 percent we produced for ourselves as of 10 years ago. Of the 49 percent we import, fully a quarter of that comes politically stable and transportationally close Canada. Saudi Arabia provides only 12 percent of our imports — just beating out Nigeria (11%), Venezuela (10%) and Mexico (9%) as the top five countries importing oll to the U.S.
And on the East Coast, most of our crude oil comes from expensive Russian and West African sources, which as of today charge $111 a barrel – 23 percent higher than a year ago. This geographic exactitude may not impact your immediate costs, but it's good to know so that if you're speaking to a board member who knows what he or she is talking about, you will, too.
As for natural gas, the NYMEX price rose to hit $3.547 per 1,000 cubic feet today. The average New York State retail residential price as of June 2011, the most recent month for which the EIA has data, was $19.68 per 1,000 cubic feet — up from $12.22 in February. The EIA projects that natural gas will cost more on average this winter than last.
How You Figure?
Before a board can take any action based on these figures and projections, it needs to know how much fuel the co-op or condo consumed last winter, and at what average cost. This might be the only easy part, since you can readily extrapolate this information from fuel bills.
What then? If you're considering converting from oil to natural gas, make sure to consider historical price trends for each of these fuels. Future projection is difficult — even professional analysts with years of experience aren't infallible — so one bet-hedging option may be a dual-fuel burner, which can use either oil or natural gas. Another option may be to switch to a smaller but more efficient oil burner. (See "Your Boiler Is Too Big! How Co-ops & Condos Can Save on Fuel Costs.")
Granted, the onset of cold weather is not the best time to make such a switch, but it can be done, and depending on how much your co-op / condo expects to pay in fuel costs this winter, you could get a jump-start on recouping upfront costs by not waiting till spring.
Unquestionably, what to do to keep fuel prices manageable this winter is a tough decision — and since continuing with the status quo is a decision in itself, it's up to each co-op / condo board to not avoid crunching the numbers.
Paragraph five of this article was updated Oct. 21 to reflect that the five foreign nations listed together provide 2/3 of U.S. oil imports. A full list is available at the EIA page for U.S. Net Imports by Country. An EIA official subsequently changed a headline at the summary page cited by Habitat to add the word "Top" to "Sources of Net Crude Oil and Petroleum Product Imports."
See more Web-exclusive articles on our Site Map. For print-magazine articles back to 2002, join our Archive >>