Over the past year, oil prices have risen dramatically. There are a number of contributing factors. When energy prices soar, your local Oilheat dealers suffer right along with you. We want you to know that when crude oil prices rise dramatically, we must also pay those much higher prices to buy the heating oil you need. Below are Marketplace Facts, What the Industry is doing, How to Save.
Marketplace Facts
- Oilheat Dealers, in an effort to compete with utilities, began using hedging and forward buying in the early 90's to provide stable prices. However, the last two years have been less kind to this strategy, as prices declined in the market during the winter. At the same time, the volatility in the market has increased the prices of hedges. As a result, fewer customers are opting for this strategy, which affects both storage and the amount of forward purchased product.
- Another significant development is the introduction of new fuels, particularly the new restrictions on sulfur. This year, the off-road moved to a 500 ppm standard. This affects the amount and type of fuel stored, the markets for heating oil, and even the length of the season that "heating oil" can be sold. Additionally, this year, there has been growth and use of Bioheat fuel as a way to moderate prices and to give customers additional choice.
- Price protected programs are not without cost. Oilheat marketers must buy insurance, or "hedge" heating oil their customers want. The cost of hedging used to be approximately three cents per gallon, now it may be as much as eighteen to twenty cents per gallon, depending on the hedge. This increase is due to the volatility in the market and the number of new players. Price protection programs are not a gamble on the winter; they are merely designed to provide the opportunity for customers to know what their heating costs are in advance of the winter. An alternative is for customers to spread their payments out with an annual budget plan.
- For those who are looking to "pick" the right time to buy product, the last two years have seen heating oil prices lower in the winter than in the summer. For example, according to EIA the price of heating oil in August 2006 was $2.51 per gallon whereas the price for heating oil in February 2007 (a very cold month) was $ 2.39 per gallon.
Weather and Conversation cannot be overstated. The last two years have been particularly warm. Additionally, the higher than normal prices have encouraged conservation and the use of new equipment- which is great. Both of these have significantly reduced demand.
What Industry is Doing
Although we can't stop the rising cost of crude oil or the growing demand globally for oil, we can offer some relief for our customers.
Better Research: In 2006, NORA authorized $2,400,000 to be spent on the following projects during the next four years. Successful research, development and demonstrations grants in the past ranged from $20,000 to $350,000. The Projects support the development, demonstration, and commercialization of oilheat technology and systems in the following categories: - Bio Fuels
- Flexible Burners
- Fuel Management, Tanks and Storage
- New Products
- New Ideas
Also, The U.S. Department of Energy, in cooperation with Oilheat marketers and equipment manufacturers, has supported improvements in the efficiency and technology of Oilheat equipment, saving consumers over $6 billion. Further improvements in heating oil have benefited our environment.
Better Equipment: Advanced combustion equipment utilizes vaporizing technologies and high flow atomization burner concepts to reduce harmful emissions. Flame retention burners draw in less air and produce a hotter, more energy-efficient flame. Thermo-photo-voltaics (TPV) use radiation from flames to generate electric power for the home. Self-diagnostic and monitoring equipment alerts homeowners and Oilheat dealers to potential problems.
Brookhaven National Lab's reports that the energy savings from upgrading to modern oil equipment is large- and for many systems will be in the 25% range. The Brookhaven results provide a strong argument that our Industry needs to continue to work to retrofit existing homes with modern oilheating systems to conserve resources.
Better Fuel: The Oilheat industry is presently introducing and delivering a new and improved home heating fuel that not only surpasses earlier heating efficiency, but surpasses environmental performance as well. The industry has dramatically reduced the amount of sulfur in the fuel from over 1% in 1970 to an average of .25% today. Many dealers have gone further and are marketing .05% sulfur fuel. Low sulfur content fuel reduces air pollutant emissions and the need for vacuum cleaning of heat transfer surfaces on equipment.
It has been estimated that using this low-sulfur fuel could save American consumers as much as 50 million gallons of fuel each year. And less consumption translates directly into lower heating bills.
This year, there has been growth and use of Bioheat fuel as a way to replace the petroleum used and to give customers additional choice to help the environment. To learn go to the Bioheat fuel page.
Better Training: The best strategy continues to be conservation. NORA has completed a 160 page training guide "Efficient Oilheat, An Energy Conservation Guide" which is the foundation for the NORA Gold Certification program. This program educates technicians on energy conservation strategies ranging from simple thermostat replacements to system redesign including boiler replacements and how to analyze the energy savings for consumers. Working with a Oilheat Dealer, energy costs can be lowered by 20 -25 percent for many customers. Careful attention to energy conservation can cost effectively be achieved by nearly all consumers.
We Want To Help You To Save Energy!
When your burner is running at peak efficiency and your fuel consumption is minimized, we know we're doing a great job. That's why our industry offer top quality equipment and comprehensive service plans to make sure your system is in great working condition. Below are some quick tips to save you money.
Also, Check out more Energy Saving Tips in NORA's H.O.U.S.E (Helping Oilheat Users Save Energy).
- Regardless of the fuel you use to heat with, you should have your heating system professionally inspected, and tuned-up, if necessary. A central heating system is no different than an automobile which needs periodic inspection and maintenance. Making sure your heating equipment is running at its peak efficiency can save you up to 5% annually on your heating bills.
- Ask your Oilheat dealer about upgrading to a new, high-efficiency heating system. If your equipment is at least 15 years old, you could cut your fuel bills by up to 25% by upgrading.
- Install a programmable thermostat. These "smart" devices automatically adjust room temperature settings to energy-saving levels when you're sleeping or away from home, eliminating wasteful energy usage. The Department of Energy (DOE) estimates that a homeowner can save approximately 10 percent per year on heating and cooling costs by setting temperatures back 10 to 15 percent of the comfort level eight hours each day.
- Weatherize your home with weather-stripping around doors and windows and insulation in crawl spaces and the attic. Seal air leaks on the exterior of your home with caulking. Install storm windows and doors. Insulate your water heater and hot water pipes. Seal and insulate ducts. Replace old windows or apply clear plastic film. The money spent on weatherization pays benefits year-round since it reduces summer cooling costs as well.
- Buy ENERGY STAR-RATED appliances. By choosing ENERGY STAR for every application in your home, you can save up to 30 percent on your heating and hot water expenses. Ask your dealer about new ENERGY STAR boilers, furnaces and programmable thermostats!
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