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Is this the year for an oil-to-gas conversion?

Is this the year for an oil-to-gas conversion?

Nearly one-third of homes in Massachusetts use heating oil as their primary heating fuel. Historically, the price of heating oil has been hard to predict. For most of the 1990’s, each gallon of fuel oil cost about $1. In 1999, the price of heating oil began to rise significantly. It peaked in 2014 at more than $4 per gallon. Today, the price of a gallon of heating oil is about $3.25.

The variability of heating oil pricing is just one thing that homeowners consider when thinking about an oil-to-gas conversion. Convenience, the cost of conversion, availability and environmental concerns also factor into the decision to hold onto what you have or switch.

The most important consideration in oil-to-gas conversion

The cost of conversion is complex. It’s not simply about the sticker price of a new furnace. Initial costs are only one part of the lifetime costs of a furnace. In addition to your fixed costs, you also need to take into consideration the ongoing costs of operating the furnace.

For example, say a new 80% AFUE heating oil furnace costs $4,000 to purchase and install in an average-sized house. Homeowners paid an average of $1,700 to heat with oil in 2017-18, so we’ll assume an annual operating cost of $1,700. After 15 years, the homeowner will have paid $29,500 for heating with oil.

If the same homeowner installs a 90% efficient gas furnace instead, the expected install cost jumps to $6,000, but the annual operating costs drop to $900. After 15 years, the homeowner will have paid $19,500 for heating with gas. That’s a savings of $10,000 over heating oil.

Fifteen years is a generous lifetime for a high efficiency natural gas furnace. An oil furnaces can last for 30 years or more. So what happens when we calculate the cost of heating over 30 years – the life expectancy of the oil furnace? Keeping the fuel cost constant, the lifetime cost of each furnace looks like this.

The oil furnace, at $4,000, operated over 30 years will cost $55,000. The gas furnace – which gets replaced midway through the 30-year-cycle – will cost $39,570. This assumes that the initial furnace costs $6,000 and the replacement furnace costs $7,500. It also assumes that the second gas furnace takes advantage of technology to operate more efficiently, so the home’s gas consumption drops during the second 15 year-period to $850. Over the lifetime of an oil furnace, a natural gas alternative offers a savings of $15,430 (-28%) over 30 years.

The hidden cost of doing nothing

The example illustrates why keeping old technology might not be a good idea, even if it seemingly “costs nothing to do nothing.” An oil furnace built in 1990 may have been highly efficient by 1990’s standards. But technology improves over time, allowing newer furnaces to become more efficient. If you keep an inefficient furnace for 30 years, you keep that furnace’s inefficiency. You’ll end up paying a significantly higher operating cost for 10, 20 or even 30 years. As the example above shows, that can be a costly mistake.

The real cost consideration for a furnace is not the price tag of buying it and putting it in your home. The real question is how much does a furnace cost to operate over time? You’ll easily spend 2-13 times the furnace’s purchase price on operating costs over its lifetime. When operating efficiency determines the lifetime cost of a furnace, keeping an old, inefficient furnace simply doesn’t make financial sense.

The savings you’ll get from a natural gas replacement for an oil furnace can literally pay for the new furnace in just a few years. And if you set aside the money you’d have otherwise spent on running your older, inefficient oil furnace, you can use that cash to pay for a more efficient replacement gas furnace in 12-15 years. That allows you to continue reaping the benefits of lowered heating costs without having to finance the purchase of a new furnace.

If you’d like more information about oil-to-gas conversion, or you’d like to talk about replacing your older, less efficient furnace, call us at Boston Standard Plumbing and Heating at (617) 288-2911 to set up a consultation.

Photo Credit: Massachusetts Department of Environmental Protection, via Flickr

Oil to gas conversion debate rages in winter

Oil to gas conversion debate rages in winter

When the temperature drops, Boston homeowners who rely on heating oil always ask, “Should I do an oil to gas conversion?” Heating oil is a commodity, so prices can fluctuate significantly during the heating season. To some extent, Boston homeowners can offset price increases by stocking up on heating oil before the heating season gets into full swing.

In some cases, however, homeowners can’t take full advantage of lower heating oil prices when they occur. When prices are relatively low, homeowners may not have sufficient space to store heating oil. They also may not have the extra cash on hand to top off their heating oil supplies.

Right now, heating oil prices are comparatively low, at about $2.70 per gallon. That doesn’t mean that heating oil customers are getting a break, however. In 2016-17, the average cost per gallon of heating oil was about $2.50. According to the experts at the Energy Markets Division (MassDOER), the average Massachusetts natural gas residential customer spent about $730 to heat a home last year. In comparison, the average Massachusetts heating oil customer spent nearly $2,200. With oil prices already above last year’s averages, homeowners that use heating oil can expect to spend more this year to heat their homes.

Can an oil to gas conversion save money?

Is an oil to gas conversion worth the expense? When you can reduce your operating costs by two-thirds, it’s definitely worth considering. Over a five-year period, homeowners could reduce their heating expenditures by more than $7,000. With such a significant reduction in operating costs, an oil to gas conversion quickly pays for itself!

Overall, the price of natural gas has been remarkably stable over the past seven years. The price of other fuel types, including heating oil, propane and electricity, have experienced wide fluctuations. Experts predict continued stability in the cost of natural gas heat. That means homeowners can expect to see stable winter heating costs for the foreseeable future.

In addition to significant cost savings, there are other benefits. First, the cost of heating is spread out over the course of the season. Natural gas is a metered service, so your bill is based on what you use during a particular billing period. Unlike heating oil, you don’t need to come up with a big payment up front. Utilities also offer “budget” plans that amortize the cost of gas consumption over the course of an entire year. A budget plan allows you to equalize your utility payments each month. By itself, that can be a big stabilizer for your annual energy costs.

Even if you don’t want to budget through your utility company, you can still set aside your “average” utility cost each month in a separate savings account. In the summer, you’ll be setting aside more money when your utility bills are low. In the winter, you’ll be drawing on the extra cash you’ve socked away. You’ll get the benefit of stability in your heating and cooling budget, and remain in control of your cash.

An oil to gas conversion offers other benefits

Another benefit to consider is environmental. When you convert to natural gas, you no longer store fuel on your property or in your home. You eliminate the danger of a spill or leak. Oil spills and cleanups are carefully regulated by the State. Cleaning up a leak – even a relatively small one – can be remarkably expensive. Further, heating oil is toxic. Contact with skin and inhalation of vapors can cause serious health issues.

Even if your oil tank is in good condition, other events in and around your home can cause problems for your tank. Broken pipes or excessive rain can cause flooding that compromises the integrity or stability of the tank. Careless refilling and other accidents can cause significant spills. When you do an oil to gas conversion, you eliminate these hazards and make your home healthier and safer.

If your goal is to reduce your home’s carbon footprint, an oil to gas conversion will help you! Heating oil combustion releases about 38% more carbon dioxide into the air than natural gas combustion does. In fact, natural gas combustion releases less carbon into the atmosphere than coal of any type, diesel fuel, heating oil, gasoline or propane.

Most consumers in the Boston area qualify for 0% interest loans to finance energy efficiency upgrades. In addition, some homeowners can qualify for 0% loans of up to $50,000 for large improvement projects that improve weatherization or heating system upgrades.

For more information about an oil to gas conversion, please contact us at Boston Standard Plumbing at (617) 288-2911.

Photo Credit: Massachusetts Department of Environmental Protection, via Flickr

Oil-to-Gas Conversion Can Save In Many Ways

According to the Energy Information Administration in Washington, DC, homeowners who use liquid fuels (heating oil, kerosene and propane) as well as homeowners who heat with electricity can spend as much as four times more than those who heat with natural gas. Boston homeowners who use these fuels really miss the opportunity to save on home heating costs!

Naturally, homeowners are wary of the cost of switching from fuel oil (or electricity) to natural gas, but MassSave offers a number of ways to reduce the initial cost of switching. In addition, by reducing the operating cost of a furnace or heater by as much as 75% per year, homeowners can realize the return on investment of switching in as little as two years!

Right now, Boston area homeowners can take advantage of rebates on the purchase and installation of high-efficiency furnaces and boilers through MassSave. The program provides rebates of up to $450 on qualifying warm-air furnaces, and rebates of up to $1,500 on qualifying forced hot-water boilers. In addition to these rebate programs, which will reduce the initial investment in new heating equipment, MassSave also offers a 0%, 7-year financing program to qualified homeowners.

The deal gets better for homeowners who itemize their federal taxes. Through December 31, 2013, homeowners may be able to claim tax credits of $150 on the purchase and installation of qualified natural gas furnaces and boilers. Qualified products include those with efficiency ratings of 95% or higher.

These programs reduce your initial investment in new home heating equipment, but year after year, the reduced operational costs during the heating season will really add up. The current price of natural gas makes it the most cost-effective way to heat a home. In addition, natural gas supplemental heating is also both highly efficient and cost-effective.

In comparison, the average cost of home heating oil right now in Massachusetts is about $3.80 per gallon, according to the Massachusetts Department of Energy Resources. While this price is slightly lower than the average price for a gallon of heating oil was at this time last year, the savings are not expected to make a significant difference in the cost of heating a home this winter.

As an added benefit, an oil-to-gas conversion can eliminate the health hazards associated with home heating oil. Home heating oil is toxic, and exposures can cause serious irritations and illnesses. An oil-to-gas conversion will also eliminate the risk of hazards related to oil spills in or around the home.

For more information about MassSave programs, oil-to-gas conversions, home heating tax credits and ways to save money on heating your Boston home this winter, contact us at Boston Standard Plumbing & Heating at (617) 288-2911. We can provide up-to-date information on programs, qualifying products and help you see how affordable switching from oil to natural gas heat can be.

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Somerville Residents May Be Eligible For No-Interest Heating Loans

Residents of Somerville may qualify for interest-free loans on replacement heating equipment for their homes. The program provides loans of up to $4,500 for income-qualified residents to replace inefficient or inoperable heating equipment. The loans are also forgivable in certain circumstances.

The Heating System Replacement Program is available only to Somerville residents on a first-come, first-served basis, and provides variable-amount loans for residents who qualify, based on household size and income levels. Using income guidelines developed by the US Department of Housing and Urban Development, Somerville residents may qualify under the following household size/maximum gross income guidelines:

  • 1 person – $45,500
  • 2 people – $52,000
  • 3 people – $58,500
  • 4 people – $65,000
  • 5 people – $70,200
  • 6 people – $75,400

The loans are available only to homeowners who occupy their property as a primary residence. According to program rules, homeowners who receive one of the loans must retain ownership and occupy the improved property for at least three years following receipt of the loan.

Loan proceeds must be used to replace faulty or inefficient home heating equipment. Homeowners who qualify for the loan assistance can use the loan to perform an oil-to-gas conversion or replace an inefficient gas furnace with a more efficient one.

Loan assistance is limited, so Somerville residents who potentially qualify are urged to contact Walter Whitney, Housing Rehab Program Manager at (617) 625-6600 x2569 or wwhitney@somervillema.gov.

For residents of Boston, home heating replacement loans may also be available through MassSave. Like the loans in Somerville, these loans are also zero-interest loans with terms of up to 7 years, and loan limits of up to $25,000. Restrictions apply, so if you’re considering a replacement heating system for your home, contact us at Boston Standard Plumbing & Heating for more information on how you may be able to take advantage of these financing options.

Boston Standard Plumbing & Heating can address all of your home’s heating and cooling needs. Call us at (617) 288-2911 anytime for a consultation, or assistance with your residential heating, cooling and plumbing needs.

Boston Furnace Replacement Considerations

The decision to replace a furnace can be difficult. If the decision to replace hasn’t already been made by circumstance, cost is the usually primary factor in the decision. Can you afford to replace your heating equipment, or can you get one more season out of the old furnace? Boston homes need heating equipment that can tolerate a tough winter, so what should you look at when considering replacement?

The cost of the replacement is certainly a consideration. Many homeowners choose to upgrade (or install) their central air conditioning unit at the same time they change out their heating equipment. While this isn’t strictly necessary, depending upon the type of heating system in the home, homeowners can save thousands of dollars by redoing the heating and cooling at the same time.

The cost of operation is also a consideration. For homeowners with oil furnaces, or oil-fed boilers, the cost of heating oil has risen sharply and steadily while the cost of other heating fuels has remained relatively constant. Heating oil is nearing $4 per gallon now, and this rise in price is stirring bad memories of 2008, when the price of heating oil (at times) was nearing a whopping $5 per gallon. Natural gas furnaces can heat the same space for about 2/3 the current cost of heating oil, and the cost of natural gas is expected to remain steady. (In fact, it’s dropped about 2% in the last 12 months.)

Electric heaters are also very cost-intensive, and because most electricity is produced from coal-fired plants, the carbon emissions related to electric heat make it one of the least green options for heating. You’ll pay about twice as much to heat a given space with electricity as you would spend on the natural gas needed to heat the same space. The cost of electricity is not likely to decrease sharply enough to make it cost-effective in the foreseeable future.

Aside from the cost of the equipment and the cost of operation, another consideration is safety. Very old furnaces (30+ years) normally have asbestos linings in or around the combustion chamber. These linings are considered safe as long as the asbestos doesn’t become “friable” or airborne. (Asbestos can also be found in some old ductwork.) Friable asbestos releases microscopic particles that can remain suspended in air. If asbestos particles are inhaled, they collect in the lungs and the body cannot clear them out. Long-term exposure to asbestos can lead to a particularly difficult form of lung cancer known as malignant mesothelioma.

The potential for health problems is real when the asbestos lining in a furnace deteriorates. New furnaces do not contain asbestos, so this kind of hazard would be mitigated by furnace replacement. In addition, very old furnaces are highly inefficient. By replacing the furnace, homeowners can recover the cost of the new heating equipment in just a couple of years!

An added consideration is that most high-efficiency furnaces vent directly to the outside, bypassing the chimney altogether. Exhaust gases from conventional gas furnaces and oil-burning heaters are vented up the chimney and can damage the interior of the stack over time. To repair this, the chimney may need to be rebuilt or lined, which can represent a significant expense.

In the next few weeks, I’ll look at oil-to-gas conversions, including reasons to convert, the benefits of direct venting for heating equipment, and the environmental considerations of oil heating. In the mean time, if you’d like more information about oil-to-gas conversions, or replacing old furnaces, please contact us at Boston Standard Plumbing & Heating at (617) 288-2911 for a consultation.