Mike Gans of Ulster Forest Products makes his money off of firewood. Called this week as the weather turned chilly again, he said all his orders and deliveries were done months ago. And that even though, at an average price of $200 a cord for un-seasoned wood, which is higher priced than fuel oil this season, his sales were phenomenal.
“A lot of people made investments in new wood stoves and heating systems over the past few years when the prices were sky high,” he said. “They kept telling me they didn’t trust the prices and were expecting things to spike back up without any warning.”
Gans paused a moment, the sound of the woods coming across his cell phone. “My observation is that given how cheap gas is, diesel’s not gotten cheaper,” he added. “That’s scaring me a little.”
A look across the billing spectrum for the area saw heating oil prices that were an average $3.89 a gallon last autumn now at the $2.40 level, although many were still remembering sudden mid-winter highs of $4.33 a gallon during last winter. Kerosene costs were at $2.99 a gallon, while the state energy watchdog NYSERDA had average Mid-Hudson propane costs at $2.27 per gallon (for some reason, we just got billed $1.15 a gallon for stove propane), versus kerosene costs of $4.22 last autumn, and a high near $4.65 last winter; and propane costs of $2.97 a gallon a year ago, and a high of 3.75 a gallon last February.
As for natural gas, the big rage for the year and what many are saying is fueling the drops in prices, due to new fracking technologies (without any acknowledgement of that process’s political elements), prices are determined on a different basis than the other fuel choices, more similar to electricity according to NYSERDA. Asked about comparables, our region’s biggest supplier of both energy forms, Central Hudson, noted that natural gas bills were down 6.4 percent throughout the Northeast this year, compared to a drop of 5.9 percent for electricity costs and a national heating oil cost that was nearly 25 percent lower than last year.
Asked to predict whether any of these patterns would hold for the coming winter, Central Hudson Director of Media Relations John Maserjian noted in an email that, “Because of unpredictable variations that can occur with weather, fuel supplies and fuel costs, Central Hudson does not forecast electric and natural gas prices,” although he did reference U.S. Energy Information Agency (USEAI) reports on such matters, and noted Central Hudson’s website on energy saving tips.
The USEAI information, released in early October and including plenty of charts that show annual fuel usage costs looking like choppy waves on an ocean, noted that it predicted “heating fuel prices for homes that heat with natural gas, propane, and heating oil to be lower than prices last winter; residential electricity prices are expected to be about the same as last winter.”
Furthermore, the report’s summary also notes that “the latest outlook from government weather forecasters expects winter temperatures east of the Rocky Mountains to be warmer than last winter, with projected heating degree days in the Northeast, Midwest, and South respectively about 13%, 11%, and 8% lower; in the West, this winter is expected to be 12% colder than last winter,” while also adding that costs should remain lower for all but electricity no matter whether it gets ten percent colder than anticipated.
“Projected changes in average U.S. household heating fuel expenditures from last winter are: 10% lower for homes that heat primarily with natural gas, 25% lower for homes using oil heat, 18% lower for homes using propane heat, and 3% lower for homes that heat with electricity,” it reads. “New capacity from Marcellus mostly serves New York and New Jersey.”
Oil vs. natural gas
A quick call to several heating oil and propane companies around the area, all bought up by or merged into larger regional or national heating companies in the past years, yielded no call backs as to whether the lower heating oil and propane costs were resulting in new sales of systems for those fuels. But at Heckeroth Plumbing, one of our region’s bigger heating systems and plumbing specialists, the same inquiry resulted in the news that most of their installation work these days was for natural gas systems, with most heating oil calls being for maintenance and upgrades, with only the occasional new installation.
Back at Central Hudson, Maserjian noted that, “Since 2013, more than 1,600 residents and 400 businesses (ranging from small companies to large industrial buildings) have converted from fuel oil to natural gas heat. The average payback time for replacing a residential heating system from oil to natural gas is about 4 to 6 years, but this can vary depending on the equipment chosen, amount of fuel used, cost of fuels and specific installation requirements for the home. Natural gas is cleaner, currently less expensive, more efficient and the equipment requires less maintenance. Carbon dioxide emissions with natural gas is 28 percent less than with fuel oil.”
Maserjian added that Central Hudson is currently offering rebates for the installation of natural gas home heating systems, with an additional $1500 incentive through December 15…something that Heckeroth said was fueling a lot of their installation business of late.
Lock in packages?
Meanwhile, some have been wondering about those who bought lock-in packages from their heating companies this past summer when costs were 20 or 30 cents higher than they are now. Many, again, still remember getting caught with locked in prices when the markets fell during winter several times over the past decade.
“When people lock in with a price contract, it’s a gamble,” said John Maniscalco, CEO of the New York Oil Heating Association based in New York City in a recent white paper on the subject. “Some contracts have an escape clause.”
He added that very few fixed price contracts were signed this year by the heating oil companies in his organization, which are mostly in New York City, given how prices were already dropping again when the lock in offers were being made.
A look at Kosco and Heritage Energy though, showed new caps in place for lock-in deals, now called Price Protection Plans. But at a price. And needing pre-payment for estimated fuel needs from the get go.
“The Downside Protection Fee of 25 cents per gallon is based on the cost of ‘Risk,’” reads one item in the descriptions for these plans, now closed for the year. “Today’s volatile markets can cause huge price swings and as the uncertainty increases, the cost of protection increases as well.”
On the political heating front, where no one’s learned to channel endless primary debates into real versus virtual warmth yet, the Governor noted this week that the state’s Home Energy Assistance Program would be starting up for the season on Monday, November 16, with benefits similar to last year.
But that’s another story. Stay warm.