Shale Gas Keeps Heating Prices Low for Homeowners

Is it time for homeowners to switch from heating with oil to heating with natural gas? More and more are doing just that.

While the cost to heat with the two fuels has occasionally been close since 1990 (though gas has usually been cheaper), recent developments say that heating oil may remain significantly more expensive – and more vulnerable to price spikes – than natural gas for years to come.

“I think gas is seeming better and better,” said Michael C. Lynch of Amherst, an oil industry analyst who heads Strategic Energy & Economic Research Inc.

“Natural gas is likely to stay relatively cheap over the long run because shale gas (has become so plentiful). I believe oil prices will probably come down, although not everyone is of that opinion. But, if we experience any other unrest, that will likely cause price spikes,” Lynch said.*

Here are some numbers to consider:

  • It costs between $4,000 and $6,000 to convert from heating with oil to natural gas.
  • It costs about half as much per season to heat with natural gas as oil—around $1,250 for gas vs $2,500 or more for oil (on average).
  • So, it will take 4-5 years to recover your initial cost of conversion. But after that, you start saving every year.

In 1970, the average household in Massachusetts heated with oil. The numbers were 65 percent heating with oil, 28 percent heating with gas. Today, estimates put those numbers at 36 percent heating with oil and 47 percent heating with gas. With cheap and abundant shale gas, the trend is likely to continue and accelerate as oil prices climb ever higher.

* (Mar 28, 2011) – With oil prices spiking, is is time to switch to gas?

  • pCBB

    These numbers are based on current prices. In the future, our shale gas boom should tend to keep gas prices low. On the other hand, with these low domestic prices, energy companies are moving to export LNG, which will drive up prices, as will moves to convert vehicles to natural gas. Of course higher sale prices will increase royalties.

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