Electricity: The Heating Source for Winter 2008-09?

For years the state of Vermont has tried to move people away from using electricity to heat their homes.  In 1980 10% of Vermont's housing units heated with electricity.  Today it's less than half that.  Nationally, 30% of housing units use electricity for heat.

That's about to change.  As anyone who has not been sleeping for the past two years knows, heating oil prices have doubled in the past two years and more than tripled in the last five.  The average Vermont household could spend $3,500 or $4,000 to heat their house this coming winter.  How will many, especially low income households, afford this? 

One way is to use substitutes, and electricity is looking awfully cheap.  Here's what's likely to happen this winter if prices stay in the $4/gallon range:  People will conserve by closing off some rooms in their houses and turning down their thermostats.  But no one likes to be uncomfortable.  They will then go out and buy portable electric heaters for the rooms they use.   The heaters themselves have a low capital cost, much lower than insulating the house, putting in more energy efficient windows, or a more energy efficient boiler. 

Then they'll use a lot more electricity, which is cheaper than fuel oil.  Consider the numbers from the Vermont Department of Public Service's Fuel Price Report. At $4/gallon, fuel oil costs $36 per million BTUs, cheaper than propane (at $3.13 per gallon, it costs $43 per MMBTU).  For those Vermonters lucky enough to have natural gas--you have to live along Route 7 north of Burlington or in some town in the greater Burlington area--you only pay $22 per MMBTU.   

But electricity is looking mighty cheap.  At 13 cents per kwh, that gives electricity a cost of $39 per MMBTU, cheaper than propane and not much more than fuel oil.  And with an electric space heater, you can heat only those parts of your house that you want.

Compare those prices to five years ago.  When fuel oil was $1.41 per gallon, that translated into $13 per MMBTU (oh, the good old days).  Electricity's price was about the same as today's, which meant it was three times as expensive as fuel oil on a $/BTU basis. 

Today's electricity price, relative to fuel oil, is much cheaper than in the past, which means electric heat will be a popular solution to the high price of fuel oil and LP.   The anti-electricity folks won't like it, but it may actually be better for the environment.  If the electric heaters are used mostly during off-peak hours at night, the electricity will come from Vermont Yankee and HydroQuebec, with no carbon footprint and no smoke, sulfur dioxide, or other noxious air pollutants that would have come from burning fuel oil. 

Comments

[john Henry]

I am in general agreement with shifting to electric for heat. Electricity comes mostly from coal, nuke and hydro. I could care less about carbon emissions (that is basically a scam)but when we burn oil, we are sending money to people who wish us ill. We need to stop doing that.

There is one area for concern in the post, though:

"They will then go out and buy portable electric heaters for the rooms they use."

CPSC says that over 21,000 home fires and over 300 deaths are caused each year by space heaters.

So, you might want to watch to see if there is a spike in home fires next winter.

John Henry