Since EIA Is Never Right, Let’s Focus on What We Can Really Do About Winter Heating Costs

Every fall, without exception, the media and government and ICPA turns its attention to useful advice for consumers to be prepared for the coming winter. So far, so good. Being prepared for winter makes sense.  Unfortunately, where government enters the picture we see less than sensible advice or even observation.

The Department of Energy’s Energy Information Agency issues its “winter heating fuels” report in the fall and in that report comes “analysis” of what the coming winter will be like in terms of price and severity of weather. While the EIA does a commendable job collecting statistics, it has something of a less than stellar record being accurate with regard to the clarity of its crystal ball on future prices.

In fact, EIA has never been right. Ever.

In 2012 they return – this time saying it costs about $900 to heat your home with electricity. Where? Florida? Electricity costs to heat your home are about equal to $8 a gallon. So, based on the average consumer consumption of 700 gallons per year the cost of electric heat is closer to $5,600 here in the Northeast – not the $900 from Washington. See > https://ctcema.wordpress.com/2011/11/07/lets-do-the-math-on-electric-heat/

Here is one of the example of just how badly these EIA “estimates” have become, from their view of the 2008/09 heating season in the fall of 2008 and how that heating season actually ended up:

  • Home Heating Oil: A 50 cent/gallon increase (to $3.89/gallon) in retail heating oil prices over the previous winter. The Connecticut reality: $2.67 for a 140,000 BTU gallon, or $1.22 a gallon less than the forecast.
  • Natural Gas: An increase (to $14.82/MCF) in retail natural gas prices. The Connecticut reality: Natural gas at just under $7.00/MCF.
  • Electricity: Connecticut has the highest electric rates in the lower 48 states.  CL&P’s rate is 19.14 cents/ kilowatt hour.  In BTU equivalent to heating oil, heating a home with electricity would cost $7.85 per gallon, the most expensive way to heat a home. EIA overlooked states like Connecticut in its belief that heating with electricity over a winter would cost about $800 – when in reality the cost here was closer to $800 per month.
  • Did DOE/EIA predict the “no-winter” winter of 2011/2012? No, they missed it.
  • Did DOE/EIA predict the heating fuels price collapse of 2007/2008 when we had a warmer than normal winter? No, they missed it.
  • Further, DOE/EIA updates their “predictions” every 30 days, correcting the errors made from the previous report. Those corrections rarely make the front page.

To be sure, looking into the future and trying to tell people what they will be paying for anything is akin to estimating what the Dow Jones Industrial average will be on January 15th or who will win the SuperBowl or what next week’s winning lottery numbers will be. It’s an inexact science, if science at all. To that end, no disrespect intended, attention paid to private or government estimates of what the next heating season will look like in price or severity should not receive the attention the media gives it as it bears no resemblance to the reality we all actually face.

We would prefer to concentrate on sound advice to consumers as consumers have far more control over their energy costs than they realize.

  1. Purchasing fuel. Unlike utility heated homes, Oilheat consumers have several options on how they may purchase their fuel and benefit from a competitive market place where heating oil dealers work hard to gain and keep your business. Consumers can lock in their price, or can “cap” their price, and can establish a budget plan to manage their costs. Learn more about these options right here > http://www.icpa.org/oilheat_contract_info.htm
  2. Conservation. Every one of us pays an electric bill each month and among the many fees we pay on electricity is the Combined Systems Benefit Charge. This fee is used to subsidize a home energy audit for every consumer who wants one. As you’ve already paid for an energy audit – by all means call your local heating retailer and request one! These energy audits cover everything from appliances and lighting to heating and cooling systems, insulation and ductwork and vents. Reducing your energy consumption by becoming more efficient means saving money for you! See > https://ctcema.wordpress.com/2011/08/01/why-home-energy-audits-work/
  3. At Home. There are a wide variety of things every consumer can do around the house to reduce energy consumption, even without an audit. We recommend our helpful “tips” page to learn more! http://www.icpa.org/tips.htm

Rather than engage in the parlor game of predicting the future – focus on the important things you can do to reduce and manage your energy costs. Your local heating oil retailer is standing by ready to help you get through the coming winter – regardless of what comes!

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About ctcema

President, CEMA
This entry was posted in Energy Conservation, Energy Prices. Bookmark the permalink.

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