Oil to Gas Conversions – The Time is Now!

Natural gas prices have plummeted in the past 5 years and are now lower than they were 20 years ago. The chart shows the progression of natural gas prices over the past 20 years. You can actually see the effect that shale hydraulic fracturing had on the market price of natural gas starting in 2005 after a decade long gradual increase. This chart was put together by the US Energy Information Administration in the first quarter of 2012, so its projection of 2012/2013 price stabilization is already an anachronism. In fact, while home heating oil and gasoline prices continue to escalate, the natural gas glut continues to suppress natural seasonal price spikes. The wellhead price of natural gas is down to less than $4 per thousand cubic feet.  This is only the case in the United States. The current gas glut in the U.S.–driven by an unconventional extraction technique–has driven prices down to average $2 to $3 per million British thermal units this year, far below the $13 to $18 level seen in Asia and Europe.  Unfortunately, liquefied natural gas (LNG) is very difficult to store and transport and can really only be done so at reasonable cost via pipeline. Therefor, it would be difficult for the US to do anything but consume its own production. Hence, the glut and the price deflation and decrease in oil and gas imports.

This is why it is an extremely good time for those who can convert to natural gas from oil to do so now.  Here in the northeast, a consumer can easily burn 550 gallons of No. 2 fuel oil in a heating season, when equated to about 740 CCF of natural gas for the same BTU output at $3.85 per gallon of oil and .93 per CCF, this equates to a $1450 savings in just one heating season. Based upon a 5 year Return On Investment payback, even a $7150 oil to gas conversion would put you ahead of the game.

National Grid is forecasting natural gas heating costs this winter could be reduced by as much as three percent for homeowners during the upcoming winter season. The company is basing its prediction on current forecast market conditions. A typical residential heating customer using around 711 therms during a normal heating season from November to March would pay about $644, which is $21 less than last year for the same amount of usage.

Try the following calculators for your own comparison:   PECO Residential Oil to Gas Heat Conversion Calculator     PSE&G Residential Oil to Gas Spreadsheet Calculator

As always, to keep up to date with what’s new in HVAC technology, visit our website at airideal.com and follow us on Twitter @airideal and at our Facebook page!

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2 comments on “Oil to Gas Conversions – The Time is Now!

  1. Maggie says:

    I would be the first to convert but cannot get National Grid interested in bringing gas into my neighborhood. Any suggestions?

    • airideal says:

      Unfortunately, Maggie, as National Grid is technically not a public utility, their pipeline expansion activities are only driven by profit incentive. Without significant load density, they are loathe to extend into areas without a high probability of significant return on that investment with additional connected load. I myself tried to get the main extended 300′ to my own home and was given a estimate of $20K to do so. About the only thing you can do is get the signatures of as many of your neighbors between you and the nearest main who are willing to convert. Then they might be interested.

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