In our annual review of home heating fuels on Long Island, nothing has changed except for the widened gap between fuel oil and Natural gas prices. Today, “Prices for crude oil and natural gas moved in opposite directions after the U.S. government issued weekly supply reports for both fuels. Benchmark oil for October delivery gained 93 cents, or 1.1 percent, to close at $108.37 a barrel on the New York Mercantile Exchange. But natural gas futures fell 10.5 cents, or 2.9 percent, to $3.575 per 1,000 cubic feet.” Read more here.
The impact that shale hydraulic fracturing has had on the suppression and reduction of natural gas prices is phenomenal. According to an article this week in USA Today, “Now, the United States produces more natural gas than it can use. As a result, prices have plummeted… When supply eclipses demand, the only way to increase prices is to reduce the supply or increase demand. Reducing the supply is not an easy proposition for natural gas producers — their contracts on wells often require them to keep drilling in order to maintain the lease. That is why natural gas producers, like Exxon Mobil have pushed the Department of Energy to speed up its approval of applications to export natural gas.”
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 why it is an extremely good time for those who can convert to natural gas from oil to do so now. According to NYSERDA, the current price of natural gas in New York State is $1.56 per Therm (or 100 CCF). There are 100,000 BTUs per Therm of natural gas. Therefore, if you were to price natural gas versus no. 2 fuel oil by the BTU content of a gallon of oil (138,000 BTUs) the current rates would be $4.07 for a gallon of oil and $2.17 for a “gallon” of natural gas with the same heating capacity. Here in the northeast, a consumer can easily burn 1000 gallons of No. 2 fuel oil in a heating season, when equated to about 1000 CCF of natural gas for the same BTU output at $4.07 per gallon of oil and $2.17 per Therm, this equates to a $1900 savings in just one heating season. Based upon a 5 year Return On Investment payback, even a $9500.00 oil to gas conversion would put you ahead of the game.
For more information on heating fuels comparisons, including propane and geothermal, see our previous article here.
Try the following calculators for your own comparison: ConEd Oil to Gas Heat Conversion Calculator PSE&G Residential Oil to Gas Spreadsheet Calculator