Get Ready for Fuel Switching

In regions of the country that rely primarily on heating oil or propane for heat, including the Northeast and parts of the Upper Midwest, something pretty surprising has happened over the past six months. The cost of delivered heat from these fuels has risen above that of electricity—even when that electricity is used for electric-resistance heating in baseboard radiators. (For more on comparing fuel costs, see the BackPage Primer.) Electric-resistance heat can sometimes be cheaper than even natural gas, particularly for buildings with old furnaces and leaky, poorly insulated ducts. If a heat pump is used to double or triple the efficiency of electric heating, heating with electricity is almost always cheaper than using natural gas, oil, or propane (though purchasing and installing a heat pump is expensive).

Barring a significant price drop for heating oil or propane, and if the price of natural gas keeps rising faster than that of electricity (which is regulated), lots of buildings may be switching from their standard heating fuels to electric heat this coming winter—which could wreak havoc in the utility industry.


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