Home heating oil is now cheap, but natural gas is even cheaper

Even though prices are way down, oil cant catch a break from homeowners who remain willing to spend thousands of dollars converting their heating systems to natural gas.

Heating oil has been losing market share to natural gas, electricity and other heat sources for years. Only 6% of U.S. homes used oil heat in 2012, government data show. But in the chilly Northeastern states, oil warms about 25% of all homes.

The price of a gallon of No. 2 heating oil a highly refined, cleaner-burning fuel used in single-family homes is down 26% this year, from a high of $4.242 on Feb. 24 to $3.142 on Dec. 15, according to the U.S. Energy Information Administration.

Oil industry leaders believe the price drop and the $5,000 to $19,000 expense of installing gas lines, furnaces and other equipment ought to make homeowners think twice about switching from oil to gas. Theres a large capital cost to making this kind of switch, said Richard Sweetser, president of Exergy Partners, which consults for the oil industry.

But theres no sign the price plunge has slowed the pace of oil-to-gas conversions.

Data from Con Edison, one of New York Citys gas utilities, says big buildings are switching from oil to gas at a faster pace than in 2013.

Through October, 1,249 large buildings in Con Eds New York City territory switched from oil to gas, a pace of 125 conversions per month. In all of 2013, Con Ed won 1,293 new big-building gas customers, or 108 per month. Some building owners are being pushed to change to gas becasue of city anti-pollution rules requiring a phase-out of dirtier, less refined No. 4 and No. 6 heating oil.

Con Edison has no data on single-family home conversions, but says they seem to be running at about the same pace as last year.

Cheap oil has probably kept a few people from switching over to gas, said Ryan Williams, general manager of 128 Plumbing, Heating and Cooling in Wakefield, Mass.

But Williams says customers who have changed to natural gas are still happy despite cheaper oil prices. The technology behind the gas equipment is far superior to any oil equipment, he said. Nobody would ever put oil in their house unless there was no gas on their street.

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Home heating oil is now cheap, but natural gas is even cheaper