At an average of $3.90/gallon, home heating oil is the most expensive it’s been since 2008. But its competitor, natural gas, has stayed at a constant, lower, price. As a result, homeowners are switching over to natural gas, and oil has taken a backseat to the newly popularized heating method.
“There’s been a continuing trend with increasing numbers in the last three years,” said David Graves, spokesperson for National Grid, about oil-to-gas converts.
Graves said throughout New England, in fiscal year 2012, they had 6,071 clients switch from oil to natural gas, compared to 4,968 in 2011. National Grid’s fiscal years run from April to March, so the 2012 fiscal year data is incomplete.
“We’re three months short and we still had 1,100 more convert this year,” said Graves.
New homes are now more often being constructed with gas heating systems and, because of this, the number of private homes that use gas has exceeded the number with oil.
“It used to be a 60-percent to 40-percent ratio of oil to gas in homes,” said Graves. “Now that’s reversed.”
But converting from oil to natural gas heat is not cheap.
Graves called the cost of converting “significant,” noting that the consumer would have to pay for installation, a new heating system and a tie-in to the gas mains. The total cost could be several thousand dollars, an amount Graves said people wouldn’t make up with the reduced cost of gas for several years.
Though the number of converts is growing, there are still opponents of natural gas use, including Julie Gill, Executive Director and CEO of Oil Heat Institute of Rhode Island.
“Like almost everything else in life, if it sounds too good to be true, it probably is,” she said in an open letter. “The fact is, when it comes to natural gas if you scratch the surface of the industry rhetoric, it becomes abundantly clear that switching to natural gas is a sucker’s bet.”
Gill said that the cost of switching to gas heat could cost as much as $10,000, and the industry promise the cost will be amortized over years is untrue.
“Unfortunately, the notion that the cost of switching to natural gas can be quickly recovered is based on the assumption that natural gas prices will remain where they are and the fact is, that is simply not the case,” she said.
Graves said he isn’t sure how long gas prices will continue to remain static.
“If I had the answer to that question I would be a very rich man,” he said.
Gill, however, is confident gas prices will climb sooner than later.
“History shows that the price of fossil fuels track one another fairly closely,” she said. “When the price of oil climbs, the price of natural gas closes the gap; likewise, when the price of natural gas goes up, the price of oil follows, prodded by the invisible hand of the free market. Indeed, a confluence of circumstances is already taking shape that virtually guarantees that the price of natural gas will increase in both the short term and the long run.”
The cost of natural gas has remained stable because the domestic supply of natural gas is abundant. Newer supplies of natural gas have been found underground, trapped under rock. To extract the gas, drillers use a technique called hydraulic fracturing, or “fracking,” in which a mixture of water and chemicals is injected into the ground to push the gas out. Some environmentalists are crying out against this method, citing it as unsafe.
But on the flipside, natural gas is a more environmentally friendly way to heat homes.
“A molecule of natural gas is more efficient than a molecule of oil and it burns more cleanly,” said Graves.
Despite the debates surrounding cost and efficiency, there are benefits to the diversity of gas, a major reason Graves said more new homes are being fitted for natural gas heating. Unlike oil, gas heat can be used for cooking, hot water and gas fireplaces.