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Should my home switch from oil heat to natural gas?

Fuel oil prices are still high! What are the alternatives? Can we convert the burner in our heating system from #2 oil to natural gas, while leaving the existing boiler unit in place?

Our home’s heating oil contract is up for renewal in December. In 2010, we switched to a budget plan paying $3.06 per gallon of #2 oil. For 2011, the amount rose ever so slightly to $3.09. 

And then in December 2011, we renewed under a cap plan to avoid fuel spikes, which seemed like a good move at the time. But every fuel oil delivery since then has been at the maximum cap rate of $4.50. Bummer!*

What are the alternatives? 

We have done some air-sealing and insulation work to increase our home’s energy efficiency. I strongly recommend the local EnergizeNY program to help you boost comfort and savings!  That’s a help, but…

I went to the ConEdison website for gas conversions. They have a calculator, “Estimate Your Savings,” just for folks, like me, curious about moving oil to natural gas.

I plugged in our average annual oil use (800 gallons) and the rates from 2011 and 2012. I used a calendar year usage average for past 2 years to balance last year’s mild winter with the prior year’s much colder winter.

At last year’s oil rate ($3.09), according to the calculator, I would have saved just over $660 at today’s gas prices. Nice.

But at this year’s oil rate ($4.50), the calculator tells me I would save a nearly $1,800!  Fifty percent savings?! Really?! Now I am paying attention!

The ConEd screen shot for 2012 shows our $4.50 in oil equal to $2.28 “Natural Gas (cost expressed in a gallon of oil).” Say what?

I have no idea how ConEdison calculates the conversion value based on this somewhat awkward explanation. Is this too good to be true?!

Both fuel oil and natural gas prices fluctuate. Which commodity is most cost-effective per unit of heat?  That depends! One gallon on heating oil (#2) contains the same heat content as 1.39 therms of natural gas.**

So, theoretically, If 1.39 therms of gas costs less than one gallon of oil, gas should be more cost-effective.

While at the ConEdison site, I downloaded our gas and electric history. Over the past 24 months, our gas price has averaged $2.74 per therm (total monthly gas charges divided by monthly therms). 

Multiplying that average price by the conversion rate yields $3.80 [here’s the math: $2.74/therm x 1.39 therms/gallon = $3.81].  That is 15% below what I am paying now. And well below the average fuel oil price available on non-budget plans. At that rate, we’d save $500 a year. Not bad.

Our home already has natural gas for hot water and our stove. Thank goodness for that! Otherwise, here is the ConEd timeline diagram for the “Request for Gas Service” process!  Note all the waiting periods in red!

We have an old but reliable Weil-Mclain boiler that makes steam for our radiators. We’ve wrapped the steam pipes and, during prior home renovations, insulated their wall chases. Our basement’s sill plate is spray foamed to eliminate the chimney effect that makes older homes drafty.

According to our Energy Star home energy assessment that we got through EnergizeNY, our boiler is about 82% efficient, not bad given its age. Of course, we’ve replaced most of its moving parts and the burner over time. The burner sits on the bottom front of the boiler, feeding in the oil now.

Can we convert the burner in our heating system from #2 oil to natural gas, while leaving the existing boiler unit in place? What would that cost? How long would that take to pay back?

I’ll keep you posted. I'll have to call in a heating expert!  Leave a comment, if you’d like to learn more about oil to gas conversions.  Or if you want to pass on some advice!

* All the fuel rates here include all taxes and surcharges. 

** 1 gallon [U.S.] of distillate #2 fuel oil = 40.7 kilowatt hours = 1.39 therms of natural gas

PS. Our oil tank is above ground in the basement and in good shape. It does take up 18 square feet of prime storage space. If we do convert the burner to gas in phase 1, phase 2 might be involve removing the oil tank and putting up shelving for all the important stuff down there! 

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Leo Wiegman October 28, 2012 at 06:56 PM
I asked energy expert, Lindsay Audin, on how to calculate the fuel conversion. Here's Lindsay on these topics: "... [ConEdison]'s about right. It's why I converted our rental property to gas years ago, which ended up paying for itself in just over 3 years (I had budgeted for 6)....The big differential is due to the rising cost of oil being simultaneous with the bottoming price of natural gas." and "The Con Ed calculator does not take into account differentials in burner efficiency during the conversion, which may also shorten payback, depending on the condition of an existing oil burner. Here's the basic calculation... — burning a gallon of #2 oil releases about 140,000 BTU of heat. At 75% overall efficiency, that gives you 105,000 BTU of useable heat per gallon. Convert that into gallons per million BTU by dividing it into 1 million to get 9.524 gals/million BTU. Multiply that by the price of oil (to make it easy, let's use $4/gal). That gives us about $38.10 per MMBTU. — burning a therm of gas yields (by definition) 100,000 BTU. At 75% overall efficiency, we get 75,000 BTU per therm. Divide into 1 million to get 13.33 therms per million BTU. Multiply by the overall cost of gas (supply + delivery at tarff rate) of., say,$1.30 per therm, to get $17.33 per million BTU. —$17.33/38.10 = 45.5%, or a saving of about 55%." So, the savings is NOT too good to be true, especially if you have gas already, lowering your conversion cost.
Bob Rohr October 28, 2012 at 07:33 PM
One of the reasons I have always enjoyed Nat Gas heat is that I have no yearly service contract. That adds to your yearly cost. I also cook, dry clothes and heat the water with it. It also runs my gas grill, no more running out for tanks.

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