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| Ten Important Questions to Ask About Your
Choice in Heating Oil |
 1. Which heating fuel is
less expensive - oil or natural gas?
Currently -The price of heating oil is more than 20% less expensive than an
equivalent amount of natural gas, with the residential price of natural gas
being $1.10 per gallon during the last heating season. In fact, heating oil has
been historically less expensive than natural gas in Maine, according to the
U.S. Department of Energy data.
Long Term - While it is difficult to predict the future, the economists looking
at the market availability and costs of the construction of the pipeline and
rates that would have to be charged to be profitable conclude:
"...under most scenarios, most new Maine loads (potential gas markets) can only
be reached at costs higher than existing alternative fuels, primarily no.2 and
no.6 oil."
Reed Report - Maine Natural Gas Market Study, May 29, 1997. Commissioned by the
Maine State Planning Offices.
2. What would it cost me to convert my current system to natural gas?
It is important to get an objective evaluation of conversion costs and
requirements. According to John E. Batey, former engineer with the U.S. Dept. of
Energy, the real costs of conversion to a natural gas system will range from
$1,000-$2,000. He also stressed that failure to perform conversions correctly
will result in problems such as corrosion of system components and
significantly lower efficiency, to safety hazards and economic loss with higher
fuel cost and lengthy playback periods. These cautions were raised by The
Consumer Energy Council of America, an independent consumer research group. In
their brochure, "Oil, Gas, Or? (1991 and 1994) " the Council does not recommend
conversion gas burners to replace oil burners because the economic return on
investment is actually a loss. Instead, they advise that "Conservation makes
more sense than switching from oil to gas."
3. Can natural gas companies offer incentives to lure me in...then
dramatically increase rates later?
There are legitimate reasons to be concerned. The recent filings of Bangor Gas
and Northern Utilities that requested significant increases in future rates,
indicate that the consumer should ask for exact costs of conversion and for the
rates that will be charged for the next 10 years. 10 years because the natural
gas companies have planned their rate increases that far ahead and can tell
customers NOW.
4. Which fuel is safer? Is one safer than the other?
This is the concern we hear most frequently from consumers. While a leak in
your oil tank may cause temporary inconveniences, there have been no deaths or
injuries associated with leaking oil tanks. The risks of injury are far greater
with natural gas leaks and the statistics from the U.S. Dept. of Transportation's Office of Pipeline Safety show that between 1986-1998, natural gas pipeline
accidents have resulted in the deaths of over 200 people, injured more than
1,700 people, and caused more than $300 million in property damage. So safety
is a legitimate concern.
5. In the event of an international crisis, would natural gas be more
readily available than oil?
No. Maine's oil and natural gas supplies are dependent on virtually the same
geographic origins. 50% of Maine's oil supply comes from U.S. sources with most
of the remaining supply coming from Canada. Maine's new natural gas supply
comes entirely from Canada.
6. Is natural gas cleaner and more efficient?
This is a misperception that is refuted by studies done by the U.S.
Environmental Protection Agency, and the U.S. Dept. of Energy. According to
these studies, heating oil and natural gas produce approximately the same
levels of pollutants. Natural gas is not cleaner than heating oil. According to
the U.S. Dept. of Energy and the Gas Appliances Manufacturers Association,
heating oil equipment is actually more efficient, on average, than natural gas
heating equipment.
7. Is either natural gas or oil better for the environment?
No. Both fuel sources cause similar amounts of pollutants in the environment.
Many environmentalists are concerned about the risks to our wetlands, rivers and
forests, that will be the impact of gas pipeline construction, and about leaks
and accidents that have occurred in existing pipelines. Further, many have
expressed concern about natural gas as it is a power greenhouse gas which
contributes to global warming.
8. Will the pipeline be an economic boom for Maine and the communities it
passes through?
Natural gas is being promoted by gas companies as an economic boom. While the
construction of the pipelines will create temporary construction jobs, some of
the contracts have gone to out-of-state construction companies, reducing the
benefit to Maine workers.
9. Is natural gas a boom to the tax base in the communities it goes
through?
While the pipelines pay local fees to use right-of- ways, those fees do not
compare to the impact of the jobs, excise taxes paid on vehicles, property
taxes, and payroll taxes currently paid by the oil dealers of Maine. Maine oil
dealers pay our state governments an estimated $49 million in sales and income
takes every year. In the communities across the state where they have local
offices, they pay an estimated $13.7 million in local property taxes. They
currently have a payroll of $230 million per year, supporting 8,000 jobs for
Maine people. This is money that gets recirculated in communities throughout
the state in the purchase of goods and services.
10. Will the state look to taxpayers utility ratepayers to subsidize the
cost of the construction of the pipeline or to encourage use of gas with tax
incentives?
There needs to be consumer vigilance in this area. The Reed Report, prepared
for the Maine State Planning Office, suggested a number of rate structure
policy issues and other ways that government policy could encourage the use of
natural gas over other choices of fuel. Some question whether this is the
proper role of government - promoting one fuel choice over another.
Consumers and elected officials need to be vigilant to insure that the costs of
construction of these billion dollar pipelines, and losses in the early years
of the pipeline's use, are not passed on to utility ratepayers or taxpayers by
utility companies setting up gas distribution businesses.
Consumers need to be told the truth about future rate hikes that will be
necessary to cover costs before they make a decision to change fuels.
These questions were taken from a handout by the
Maine Oil Dealers Association.
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| C.N. Brown Company, P.O. Box 200,
South Paris, Maine 04281 | Telephone: (207) 743-9212 |
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