Natural gas price spikes in MA

jesmed1

Homeowners often come here with questions based on recent heating bills that seem high to them. Then the question becomes, is that heating bill high because of rising energy prices, or because you just bought a bigger house and you didn't realize how much it was going to cost to heat, or because your house is poorly insulated and leaking air, or a combination of all three?

Here in the Boston area, natural gas prices (as delivered to the home) have risen around 50% since October. Some of that rise is the normal increase from summer to winter prices, as higher demand causes higher commodity price during the heating season. But some of it is a result of local utility companies having requested (and been granted by the MA utilities commission) hikes in delivery fees.

As of now, the average price per therm in the Boston area is around $2.50/therm. That means natural gas is now the same price per BTU as my heating oil at $3.50/gallon.

Local lawmakers, and the MA governor, are scrambling to respond to the public outcry from howmeowners who are suddenly getting massive gas bills.

So, while natural gas may still be less expensive per BTU than oil in many other parts of the country, right now it's roughly at parity with oil here in the Bay State.

https://www.bls.gov/regions/northeast/news-release/averageenergyprices_boston.htm#:~:text=Prices%20paid%20by%20Boston%20area,(See%20chart%203.)

random12345

In the Boston area too. That's a good catch. Didn't realize it was that high. Full-service oil providers are still charging more than $3.50 though. The discount providers seem like they're slightly below that even.

jesmed1

@random12345

We have a good full-service provider, but we are also a member of Green Energy Consumer Alliance, which gives us a pre-negotiated lower rate on our oil. Green Energy negotiates each year with many major providers, giving them a fixed markup per gallon which is lower than average. So you keep you existing oil company, but you get the lower rate negotiated by GECA.

So if you're heating with oil, I highly recommend joining. It's only $25 per year. We typically get 30 cents or more per gallon off average local heating oil prices. Our last delivery 1 week ago was $3.51/gal.

https://www.greenenergyconsumers.org/

Jamie Hall

And all this surprises someone?

If you restrict supply, guess what: prices go up. It's called "supply and demand"…

random12345

@jesmed1 I think I looked into that at one point and the only full service member dealer in my area used a fairly high amount of biodiesel, and since I have both practical and ethical concerns with that, it wasn't worth it for me. The burner is not rated for anything above B20, and I don't like the idea of burning food. Thanks for the suggestion though.

jesmed1

The main supply constraint here in New England seems to be limited natural gas pipeline capacity.

https://marcelluscoalition.org/2022/09/12/natural-gas-pipelines-would-ease-new-englands-chronic-energy-woes/

Jamie Hall

It's not that they necessarily want to sell biodiesel — it's that environmental regulations say they have to….

jesmed1

https://forum.heatinghelp.com/discussion/comment/1843399#Comment_1843399

Interesting. Our dealer uses B5, and AFAIK, that's the only state mandate right now.

Hot_water_fan

Same thing is happening in MD - our gas molecules are cheap! But the gas distribution grid is expensive, which is to be expected I’d wager in a warmer climate with lower per capita consumption. Underground construction isn’t cheap. As it stands now, gas is uncompetitive with a heat pump for those paying attention. Best gas can hope for is dual fuel systems, but then why bother with the gas grid? Propane or oil start to make more sense. Probably an exaggeration to call this the death spiral but it’s not a good spot to be in - electricity has more valuable uses so if people can afford to maintain only 1 grid, it’ll be that one.

Jamie Hall

In Maryland, yes — a heat pump, if it is new construction and you don't mind forced air (or want AC) is certainly the way to go.

Up here in the northeast, not so much — but we've had this discussion before.

I do note, with considerable amusement, that New York has finally OKed the Iroquois pipe line, which will help with prices — and actual supply — though still not in the Boston area, which is really constrained.

Hot_water_fan

@Jamie Hall ha AC is pretty popular ! If people have it, it’s a natural perk. It’s fine for existing homes too. Really the only places it doesn’t make sense to at least go dual fuel would be steam/forced water with no AC.

To clarify - gas delivery charges generally do not include interstate pipelines correct? Isn’t it using the distribution within the utility? So not sure if the supply is the problem here.

pecmsg

https://forum.heatinghelp.com/discussion/comment/1843430#Comment_1843430

not going to help the Isl of long.

EBEBRATT-Ed

Supposed to be a new pipeline coming down through NY to supply the North East.

random12345

https://forum.heatinghelp.com/discussion/comment/1843403#Comment_1843403

Who are you using? Maybe things have changed…As I recall, the only member dealers near me were Devaney and Cubby.

jesmed1

We use Devaney, and I thought they use B5. I'll go back and look.

Also, AFAIK, The Bioheat fuels used by our major oil suppliers here in MA are made from used vegetable oils from restaurant fryers, etc. So they're not virgin oils that are being taken out of the food supply chain. This is different from ethanols produced for mixing with gasoline, which indeed are made directly from corn and taken out of the food supply. So I personally don't have anything against the Bioheat oil.

https://www.discoverefficiencymass.com/is-bioheat-fuel-renewable/

ethicalpaul

https://forum.heatinghelp.com/discussion/comment/1843395#Comment_1843395

first, is supply constrained (for those with existing hookups)?

Second, prices are regulated, so it’s more than supply and demand, right?

Jamie Hall

@EBEBRATT-Ed — that's the Iroquois pipeline I mentioned. It's been approved, but it will be several years before it is operational.

And @ethicalpaul — yes, utility prices are regulated. That's political, and I'm not going to go anywhere near that one. Except to say that the various public utilities regulatory bodies are supposed to set rates so that the utility companies can get a fair rate of return on invested capital and at the same time provide adequate service to the customers. Some actually do that. Some don't. But whatever, supply of gas and electricity is constrained in the New England states and downstate New York. With gas the problem is more transmission capacity. Electricity it is a dismal combination of inadequate grid capacity and lack of generating capacity.

@jesmed1 — biodiesel is also made from soybeans. In fact, most of it is. Soybeans are food…

@Hot_water_fan — unpacking what portion of gas (or electricity) prices may be attributed to local distribution vs. gas pipelines from Pennsylvania or wherever vs. the local delivery network is a bit difficult. Somebody, of course, pays for the pipelines, but that cost may be buried in the cost of the gas at a distribution facility. Whatever, they aren't free.

Hot_water_fan

@Jamie Hall If we don't know the breakdown, let's be cautious about complaining about policy regarding pipelines. I've always been under the assumption that delivery was delivery from utility to customer. Supply would include all the costs of gas to utility, whether via pipe or ship. But maybe I'm wrong.

I think regardless, there is an issue on the horizon. Maintaining the intra utility gird is expensive - this largely fixed cost can be divided out by therms and/or bills but as consumption growth flatlines or decreases, this will lead to price increases. We might be approaching the point (arguably we're here now in some markets) were we need to consider abandoning the gas grid to some extent. Trucks with propane/oil and/or electricity alone might become the go to here. My utility gas side is pricey and getting worse, at $190/year fixed, $1.11/therm delivery and supply changing constantly (currently $.60). Oil starts to look good at those delivery and fixed rates!

jesmed1

I looked into converting our oil burners to gas a year or two ago. Too expensive because we would have had to put a stainless liner in the chimney, run some new gas lines, not to mention the new burners.

Now that gas cost has ramped up to rough parity with oil here, I'm glad the gas conversion didn't pencil out.

ethicalpaul

Thanks Jamie, I just meant that natural gas isn't a traditional supply and demand good for several reasons.

For the people who don't have it, the reason isn't that they decided it's too expensive per unit volume (I'm speaking generally, there are exceptions). They don't have it because of the pipeline issues mentioned earlier, or because it's not on their street.

And the price doesn't seem to go up because the supply is down…the supply of NG is greater than it ever has been. But distribution costs rise and that's what makes the price go up (that's my allegation anyway, agree or no).

It's not like a Porsche 911 where the people who don't have it is because it's too $$$.

Mark N

I just checked my most recent bill from PSE&G here in New Jersey and the cost was $1.10 per therm delivered to the house.

ethicalpaul

Same here. I guess the ugly ports and refineries we have in a small sliver of the state aren't looking so ugly after that knowlege.

jesmed1

https://forum.heatinghelp.com/discussion/comment/1843447#Comment_1843447

I just talked to our Devaney rep. They are giving us B5, as I had thought. Their B5 has between 2% and 5% biofuel additive.

Jamie Hall

It's true that the supply of natural gas is as great or greater than it's ever been. But… if you can't get it to where you are, or you can't inexpensively, that doesn't matter. It will go where it's wanted and where it the price is right — and at the moment western Europe is the place to go. It's ridiculous that it's cheaper to liquify it, put it on a tanker (and those aren't cheap!) and ship it to Rotterdam or Milford haven — regasify it and use it… There was giong to be a LNG (liquid natural gas terminal) in Braintree, MA, but I think that that idea got shot down. It would have taken LNG from Texas to the Boston area and regasified it there…

Hot_water_fan

To roughly sketch this out:

Dual fuel setup in Boston: 5000 heating degree days (base 65) with a 36,000 btu heat loss.

Fuel Prices: $2.5/therm, $3.5/Gallon Oil, $.35/kwh.

Annual MMBtu needed: 67

Single fuel consumption: 841 therms or 607 gallons at 80% efficiency for both.

If the heat pump has a COP = 3.4 around 30F (HDD 35 or so), then it's cheaper to operate at that temp and warmer. That'll cover about 80% of usage, leaving 11.7MMBtu needed.

You could of course use gas for those ~12MMBtu. But with a fixed monthly cost of $15/month, you're connected to the gas grid for $180/Year to just use 146 therms for central heating. At that point, assuming you're not wedded to gas cooking, then 106G of oil makes more sense to me, even if the marginal energy cost is higher.

Now what happens to the gas utility if people start doing that en masse in Mass?

random12345

https://forum.heatinghelp.com/discussion/comment/1843619#Comment_1843619

That's what they told me too. Hard to believe since the GECA promotes biodiesel. I'm thinking about switching now.

EDIT: GECA does not promote biodiesel explicitly, but does encourage switching away from fossil fuels when practical.

jesmed1

Our local CBS news channel ran a story yesterday about this issue, with a focus on Eversource, one of the two regional gas companies. Eversource says their delivery charge went up 27% this year, which makes the average delivery charge $240. This is twice the cost of the supply for the average customer, which implies an average supply cost of $120.

Supply cost is up slightly this year, but lower than 2 years ago. So most of the increase is due to increased delivery charges.

Eversource says that $80 of that $240 average delivery charge pays for the Mass Save incentive program to promote heat pumps and other energy efficiency upgrades. That $80 average Mass Save charge has almost doubled since 2023. Gov Maura Healey said she is planning to spend about $5 billion through Mass Save in the next 3 years.

An Eversource VP said that the rate hike was needed to maintain their infrastructure. He said the company makes a little under 10% profit on an average gas bill for the infrastructure that they own and operate.

https://www.cbsnews.com/boston/news/massachusetts-gas-bill-delivery-fee/

random12345

I question how long our leaders are going to be able stay the course with their current green/progressive agenda.

Hot_water_fan

can we avoid the politics? Doesn’t seem relevant to the discussion. Gas infrastructure costs are increasing and not partisan to me

HeatingHelp.com

Please follow site rules and refrain from bringing up politics. Thank you.

Waher

MA politicians cancel two gas pipelines, block construction of new electric substations and high tension wires, shut down power plants without replacements, then complain about energy prices due to self inflicted scarcity.

There is a fixation with ‘net zero’ with zero acknowledgement that existing capacity must be maintained or expanded even if 100% of new construction is net zero because peak demand exceeds net zero. Peak Zero would have to be the target efficiency and that’s impossible in a state with the majority of construction predating the oil crisis in the 70s.

Hot_water_fan

I believe ISO NE’s electric peak demand was set 20 years ago? But maybe their area has changed. The capacity is there, let’s use the grid we’ve paid for!