Prices for Oilheat and natural gas track each other closely. A gallon of heating oil generally costs more than a "therm" of Natural Gas, but it delivers a lot more heat because it contains 38% more convertible energy. A gas bill also contains "extras" that you won't see on an Oilheat bill.
"Global consumption [of natural gas] could increase more than twofold in coming years, and that could make for a very competitive and unreliable international market."
U.S. News & World Report, March 2009
Natural Gas: Natural gas has been less expensive than Oilheat at some times and costlier at other times. Increasing demand is expected to affect natural gas prices in the near future. U.S. News & World Report wrote in March 2009, "Global consumption [of natural gas] could increase more than twofold in coming years, and that could make for a very competitive and unreliable international market. 'We would be competing with everyone,' says Steve Gabriel, an expert on natural gas markets at Resources for the Future. 'If we have to get into the international market, we might have a problem.'"
Oilheat: Oilheat has long been a better value than natural gas in states like New York and Massachusetts. Demand is largely based on supply, and Oilheat reserves were at a 24-year high in the summer of 2009, according to the Wall Street Journal.
Conclusion: Price is generally not a differentiator between Oilheat and natural gas. Both are fossil fuels, and their prices tend to track each other closely. Prices of both fuels have spiked in recent years, and both prices tumbled after the economy went into recession in 2008.
Natural Gas: Utility gas bills generally include supplemental charges beyond the cost of the fuel itself. These can include a basic monthly charge, delivery charges, supply charges, cost adjustment charges, distribution charges, taxes, franchise fees, administration charges and more.1
Oilheat: Oilheat prices are straightforward. When the dealer quotes a per-gallon price, the customer pays exactly that price, with no extras.
Conclusion: Comparisons of prices for natural gas and Oilheat must account for utility surcharges to be accurate, because utility customers pay for more than just fuel.
Conversion vs. Upgrade
Natural Gas: Converting a home from Oilheat to gas can cost up to $10,000 and maybe more, according to the Boston Globe.2 In addition to installing a new boiler or furnace, a homeowner might need to reline the chimney; install a gas line; install an excess flow valve to protect against fire or explosion; plumb and wire the new system; and remove or abandon an oil tank. Some utilities offer free boilers or furnaces, but these promotions may not include the costs of installation or any other services. In addition, the customer should investigate the free appliance's efficiency rating, as they are usually lower efficiency units with additional charges should the homeowner choose the higher quality equipment.
Oilheat: The cost of upgrading an Oilheat system is lower than the cost of converting, because the homeowner is buying only a new boiler or furnace, and no other equipment requires changing. The cost will be determined by the type of new equipment chosen.
Conclusion: The Consumer Energy Council of America (CECA) calls fuel conversion "an expensive gamble" with no guaranteed payoff. "In 95 out of 100 cases, it makes economic sense to stick with oil, and if an energy-related investment is desired, to invest in conservation," CECA wrote in its brochure Smart Choices for Consumers: Best Ways to Deal with High Heating Costs.
Natural Gas: Several states have tried to create competition in natural gas sales by empowering non-utility vendors to sell natural gas, but the results have been mixed. In Pennsylvania, for example, the Public Utility Commission announced in March 2009 that its attempt to create competition with the 1999 Natural Gas Choice and Competition Act had failed, and it would pursue a new initiative. The reality is that most communities are served by only one natural gas pipeline network, and it is owned and controlled by a utility.
Oilheat: There are no utilities in Oilheat. Instead, thousands of independent dealers compete for business, and competition is fierce. When a company faces stiff competition, as most Oilheat dealers do, it must match or outperform the competition to survive. Oilheat customers reap the benefits of competition every day in the form of low prices and excellent customer service.
Conclusion: Competition is alive and well in Oilheat, and consumers reap the benefits. Natural gas utilities, on the other hand, face less competition, if any.