The Economics of Staying Warm

Norfolk Faces Huge Rise In Heating Oil
By Bob Bumcrot

For the coming season Norfolk residents face an unprecedented
increase in the price of heating oil. Last year at this time typical
local prepaid contracts cost about $2.60 a gallon; they are now
about $4.60, a 77 percent rise. A thousand gallon prepaid order
this year would cost $2,000 more than last year. Some buyers
may have prepaid last year at a lower price and may be able to
do so again this year; but both the percent and the dollar
increases are likely to be close to these figures.
Consumers are already becoming painfully aware that increased
oil costs spread quickly through much of the economy. For
example, a year ago it cost $3,000 to ship a standard 40 foot
container from China to a West Coast port. It now costs $8,000.
A sad local note is the phasing out of local poinsettia farming,
which requires well-heated greenhouses.
Faced with the increase, some consumers are planning to buy oil
during the coming season when needed, at the best spot price
available. Last year this strategy would almost certainly have
resulted in a greater total cost for the season. This year the
situation is hard to forecast. A good local spot price in mid-
August was $3.90, a dollar less than the prepaid amount of $4.90
or more.
Some oil companies are said to have plans that lie between a
prepaid purchase and buying at the spot price, which may be
worth investigating. The recent fall in gasoline prices is largely
due to decreased demand. If lower numbers at the pump result in
a return of American driving habits, prices will probably shoot up
again, and heating oil is likely to follow.

In addition to various purchase strategies, many homeowners are
considering ways to reduce the amount of oil needed for the
season.
The most frequently heard idea is based, however indirectly, on
“Newton's Law of Cooling,” i.e., the rate of heat loss proportional
to the difference between the inside and outside temperatures.
Thus, if you turn down the thermostat it costs less, both to reach
the lower temperature and to maintain it through the winter.
Higher settings increase cost exponentially. Some homeowners
are planning to close off and greatly lower the temperature of one
or more zones. At least a few, in addition to Norfolk's resident
snowbirds, intend to shut down for a few months and head south
to visit friends or relatives.
Installation of modern insulation and water heaters are good ways
to save on heating costs in some buildings. It is fortunate that the
Bottelle School window and insulation project now underway will
be completed before winter. It is estimated that this will reduce
energy usage by 20 percent, a significant savings on the recent
yearly oil consumption of 23,000 gallons. Solar panels, such as
those just installed on the School roof, also produce energy
savings.
Other plans to fight the increase include greater use of wood
stoves and fireplaces. In at least one case the owner of a large,
old home has installed (for about $8,000) a new central heating
unit that burns wood pellets or coal, with the oil furnace kept as a
backup.
Unfortunately, another law–this one of economics–also applies:
when the cost of one commodity (oil) goes up, competing
commodities (wood, coal, LP gas) will also increase. In the case
of wood pellets and Bio Bricks (organic fuel blocks made in
Berlin, Conn.), the supply has become so stressed that the
newly-opened Norfolk Storage and Supply will be unable to stock
them for a while.
A useful “Home Energy Efficiency Resource Sheet”, is available
from Clean Water Action, Connecticut, (860) 232-6232,
www.cleanwateraction.org/ct. It contains information on heating

and lighting programs, tax incentives, the Connecticut Clean
Energy Fund, the Housing Investment Fund and more.

Solar panels being installed at Botelle School are one of the many ways Norfolk works to mitigate the high cost of energy.

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