An Exceptional Alternative to Heating Oil

Special Report: Propane in the Northeast

If you build or remodel in the Northeast, you know that fuel oil is the predominant energy source for home heating. In Burlington, Vt., and Buffalo, N.Y., two markets in that region selected for the Comparative Analysis of Residential Heating Systems report issued by the research firm Newport Partners, up to 60 percent of households use fuel oil to heat their homes, typically with a boiler unit in the basement.

But the call for a reliable, cost-efficient, and cleaner alternative is on the rise. This is no doubt in response to recent events, including a fuel oil shortage in 2000 that left many households in the Northeast without heat for days and prompted federally imposed policies; some of the highest electricity rates in the country; and the fact that natural gas is not widely available to homes in this area.

The Newport study, which was commissioned by the Propane Education & Research Council (PERC), clearly shows that upgrading from a standard-efficiency (78-percent AFUE) oil boiler to a high-efficiency propane furnace results in a heating system that is less costly to install and operate than a comparable oil furnace. For forced-air furnace systems, a high-efficiency (95-percent AFUE), propane-fueled unit costs about $2,100 less to install and nearly $100 a year less to operate than a high-efficiency (95-percent AFUE) oil-fueled furnace. Consider, too, that per-gallon propane rates in Burlington and Buffalo were at the time of the report 19 percent and 29 percent lower, respectively, than fuel-oil rates in those cities.

According to the report, such savings, among other factors, would mean that it takes only six months for a propane-fueled system to pay back the difference in cost of the higher-efficiency system; by the same accounting, a new oil-burning system would take nearly 16 years to pay back the difference.

The comparative costs and resulting ROI calculations also don't factor in the increasing number of federal, state, and local financial incentives, low-interest loan programs, and/or rebates being offered to promote and encourage home energy savings. For instance, in addition to earning a $1,500 federal tax credit through 2010, builders or homeowners who install a new, 95-percent AFUE heating system—including those fueled by propane—can benefit from rebates and loan programs offered by the state of Vermont and its primary utilities. New York's list of similar incentives is even longer.

If the financial picture for propane isn't enough to inspire a switch from fuel oil, consider the comparative impact on the environment, specifically carbon dioxide (CO2) emissions. For a new home built in the Northeast (as defined in the report), a new, high-efficiency propane furnace emits 725 fewer tons of greenhouse gasses into the atmosphere than a new, high-efficiency fuel-oil furnace. The results are even more dramatic—6,780 fewer tons—when a new propane unit was compared to a standard-efficiency or existing fuel-oil system.

With fuel oil falling out of favor among construction pros and homeowners due to its rising costs, unreliability, high maintenance factors, and environmental impact—not to mention a lack of alternatives and a dearth of natural gas pumped into the region—the Northeast appears primed to shed its legacy of fuel oil for the clear benefits of propane heating.

Click here to download the full text of the Comparative Analysis of Residential Heating Systems (PDF).

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