Don’t neglect in regards to the 11 million U.S. households that warmth with these fuels.
U.S. households are bracing for high winter heating bills. While it isn’t as unhealthy as what’s going on in Europe, many households are nonetheless anticipated to spend so much extra on heating than they did final 12 months.
Almost 90% of U.S. households warmth their properties with pure fuel or electrical energy, so these power sources are likely to get most of the attention.
But in at present’s weblog I wish to give attention to two different heating fuels that many individuals rely on. Heating oil costs are up 43% from a 12 months in the past. Propane costs are up 54%, with some analysts warning of a propane market “Armageddon”. As we head into winter, costs for each heating fuels are at their highest levels in years.
I wish to look, particularly, on the geography of heating oil and propane. I constructed maps utilizing knowledge from the American Community Survey, and they reveal a pronounced regional sample for each fuels. Depending on the place you reside, you’re both very doubtless or not going in any respect to have neighbors who use these heating sources.
Highly Concentrated in Northeast
Heating oil, also called distillate gasoline and similar to diesel, is delivered by truck and then burned in a furnace. In the United States, 4.4% of households warmth their properties with heating oil.
As the map above illustrates, heating oil is extremely concentrated within the Northeast. There is little utilization all through most of the continental U.S., however then 16% of households in Pennsylvania use it, 19% in New York, 24% in Massachusetts, 29% in Rhode Island, 39% in Connecticut, 40% in Vermont, 43% in New Hampshire, and 59%(!) in Maine.
The Energy Information Administration publishes an annual “Winter Fuels Outlook” by which they predict family expenditures for residence heating. For winter 2021-2022, EIA predicts that households burning heating oil will spend $1,700+ to remain heat. For hundreds of thousands of properties within the Northeast, that is going to be an unusually costly winter.
Historic Pattern of Regulation
Heating oil is extremely concentrated amongst older properties. There is a putting age sample, with 87% of properties that use heating oil constructed earlier than 1990. In distinction, amongst all U.S. properties, 65% had been constructed earlier than 1990.
This geographic sample displays the historic sample of regulation. During the Nineteen Seventies and early Nineteen Eighties, value controls for pure fuel created a scarcity which was addressed primarily by not allowing new homes within the Northeast to connect with pure fuel. Even properties proper subsequent to current pure fuel strains had been usually not allowed to connect as a result of there merely wasn’t sufficient pure fuel in these states to satisfy demand.
Price controls had been fully eliminated by the Nineteen Nineties, however the results have been lengthy lasting. Even at present — thirty years after the tip of value controls — there are nonetheless hundreds of thousands of properties within the Northeast utilizing heating oil, even though it value the occupants greater than utilizing pure fuel in virtually each one of these years.
After all, as soon as a house installs a specific heating system it tends to remain that method for a very long time. While a house could be retrofitted, for instance, from heating oil to pure fuel, this may be very costly.
Moreover, these choices usually find yourself being made below appreciable time stress. I do know an power marketing consultant in Massachusetts who twice had his heating oil furnace fail within the center of winter. In each circumstances, he ended up changing the furnace with one other oil furnace, largely as a result of he wanted to behave quick to maintain the warmth on.
It has been a decade since costs for propane, also called liquefied petroleum fuel, had been this excessive heading into winter. Back in 2011 — the final time November costs had been this excessive — the winter ended up being warmer than expected so family budgets had been granted a partial reprieve. Will households be so fortunate this time?
Almost 6 million U.S. households warmth with propane — 4.9% of households. Propane is produced throughout pure fuel processing and crude oil refining. Propane is a fuel however is saved below stress in liquid type. Similar to heating oil, propane is delivered by a truck, saved in a tank, and burned in a furnace.
The geographic sample for propane could be very totally different from heating oil, and way more widespread. Propane tends to be adopted in locations the place pure fuel just isn’t accessible. The map above displays that sample, with excessive utilization in predominantly rural states like North Dakota (14%), Montana (14%), New Hampshire (17%), South Dakota (18%), and Vermont (20%).
EIA predicts that U.S. households with propane will spend almost $1800 this winter on propane. If the winter finally ends up being 10% colder than anticipated, this might exceed $2200! Economists have studied the “heat or eat” choice discovering that lower-income households are likely to spend significantly much less on meals throughout cold-weather budgetary shocks, and these tradeoffs are more likely to be notably stark for a lot of rural households this winter.
These excessive propane costs may also doubtless gradual the gasoline’s progress. Over the final twenty years, virtually all households with a selection between propane and heating oil have chosen propane. Although it isn’t true this 12 months, in most years propane is cheaper than heating oil per unit of heating. In addition, propane heating programs require much less upkeep and propane can be utilized extra simply by different home equipment like water heaters and stoves.–
High power costs will stretch family budgets this winter. But it could additionally create a chance for electrification. As we’ve explored in earlier Energy Institute blogs (right here and right here), there are a rising quantity of insurance policies aimed toward decreasing carbon dioxide emissions by way of constructing electrification.
Homes with heating oil or propane are more likely to be particularly good candidates for electric heating. Retrofits are at all times costly, however additionally it is costly to proceed to pay excessive costs for heating oil and propane. Moreover, many of these properties are in locations with out entry to pure fuel, so it could take much less of a nudge to get these households to go all electrical.
There are of course many different components to contemplate. An economist advised me that his mother and father in rural Texas want propane as a result of ice storms ceaselessly trigger energy outages. There are all types of explanation why one specific residence could also be notably suited to at least one specific power supply.
Still, I wouldn’t be shocked to see extra GHG insurance policies focused at these properties within the close to future. These different heating fuels aren’t the biggest class of carbon dioxide emissions, however as policymakers proceed to go searching for alternatives this might be decrease hanging fruit.
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Suggested quotation: Davis, Lucas. “The Geography of Heating Oil and Propane” Energy Institute Blog, UC Berkeley, November 1, 2021, https://energyathaas.wordpress.com/2021/11/01/the-geography-of-heating-oil-and-propane/