Northeast US Feels the Economic Crush of Home Heating Oil

  • Published: Jan 23, 2012
  • 4 min read

It seems my last blog post was timely indeed as the New York Times did a piece this weekend on the high and ever-increasing cost of home heating oil and how it mostly affects the northeastern United States. The poor infrastructure for access to natural gas pipelines in our area is a testament to how poorly northeastern utilities are managed, how often they change ownership and what little oversight both the Public Service Commissions and state governments have provided over the last few decades. New England and New York State gas utilities have been reticent to extend natural gas pipelines into many neighborhoods.  I tried for years to get the gas main pipeline extended down our cul-de-sac, but was told this can’t happen unless all of my neighbors agree to convert.  During the two decades I have lived in my home, the gas utility ownership entity has changed hands at least five times.
Welcome to the northeast, the oldest area of the United States with the most dilapidated infrastructure. At times it seems that our world is crumbling around us and every public works project is a patch job. We have the highest concentration of the oldest bridges, tunnels, roads and buildings. Many of them were civil engineering wonders and the pioneering projects of their time (the NYC Subway, the Brooklyn Bridge, The Verrazzano Narrows Bridge, the Empire State Building), but for those that are not designated landmarks, not much has been done to keep them from crumbling. With that in mind, the extension of underground gas mains in the northeast will probably not become a major focus for Federal or State government until our transportation infrastructure has had its first overhaul since the New Deal nearly 80 years ago.  Of course, it will take a well-managed public utility with a stable plan for expansion and the trust of ratepayers before the Public Service Commission will allow an increase in gas rates to include significant extensions. The price of natural gas has plummeted over the last few years because of the discovery of increased reserves created by shale hydrofracturing in the northeast. This graph shows that the average oil customer pays nearly $2400 per year to heat their home, while the average natural gas customer pays only $951. With this in mind, why isn’t now the right time to keep the price of natural gas at a stable plateau by adding an excise tax or rate line item to help pay for the extension of gas mains into additional suburban areas?
This map of the United States shows how dependent the northeast is on home heating oil. The rest of the US (with the exception of Alaska) has much greater access to natural gas or inexpensive electricity. The high cost of home heating in New York and New England is one of the main reasons so many northeasterners are flocking south and west. They just cannot afford the high cost of living here, especially in retirement. Utilities (including home heating), housing costs and property taxes are the main culprits. The mass exodus of the northeastern population also increases the burden on those who stay in hopes of a brighter economic future here. Its time for the state governments and the public utilities to come up with a master plan to provide lower cost natural gas and electricity to all who want and need it. Until then, the best bet for anyone who can’t get natural gas and plans to stay in their home for the next 5 years is to install a geothermal heating and cooling system. The 30% Federal Tax Credit will be available until 2016 and this combined with utility rebates makes it your best return on investment for the long term. However, 2016 isn’t that far off and it is best not to wait for the crush that will ensue in 2014 and 2015 when the price of oil is even higher and the threat of the sunset of the 25C Renewable Tax Credits is upon us.
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