Heating oil firms, BG&E trade salvos on cost, efficiency

FUEL WAR HEATS UP

June 27, 1993|By Ross Hetrick | Ross Hetrick,Staff Writer

Heat.

It's something you don't think about, unless you don't have it.

Yet it should be a prime consideration when buying a house. The type of heat you get -- oil, natural gas or electric heat pump -- will determine heating costs and comfort for years to come.

But the two sides in the debate here -- the Baltimore Gas and Electric Co. and a collection of 50 heating oil companies, called the Better Home Heat Council -- have run radio and television spots featuring seemingly conflicting claims about the cost, efficiency and safety of their fuels.

Now confident of its gas supplies, BG&E in the last three years has aggressively expanded its gas lines and is now trying to convince oil customers to switch. (BG&E helps to pay for real estate ads sporting its blue gas flame for homes with gas heat.) Heat pump technology has also improved, offering better efficiency and more comfortable homes.

The oil companies, a diverse business by nature, have organized and have struck back with radio and print advertising extolling the virtues of oil heat. They have also began marketing earlier this year the "Heat Pump Helper," an oil-fired hot-water heater that is hooked into a heat pump system.

During the early 1970s, BG&E and other gas utilities had severely restricted the growth in new gas customers because of shortages that were later blamed on government regulation. After the federal government started lifting controls in 1978, the number of new homes using gas nationwide began to climb.

By January 1989, BG&E felt confident enough about its gas supplies that it started re-extending gas lines.

The percentage of new homes nationwide built with gas heat has jumped from 37 percent in 1978 to 65 percent in 1992, according to the Census Bureau. Oil heat in new homes has fluctuated from 8 percent in 1978 to 3 percent in 1985 to 4 percent last year. Electric heat has lost ground, dropping from 52 percent in 1978 to 29 percent in 1992.

While gas has taken an ever-increasing share of the new-home market, the oil companies are trying to maintain their share and keep their existing customers from switching to gas.

The main points of conflict are over price, convenience, cleanliness and safety. Natural gas advocates are also trying to attract customers with new products, such as gas lamps, fireplaces and grills.

Price is issue

Price is one of the slipperiest of the issues. Both gas and oil advocates claim to provide the cheaper fuel -- if you look at it their way.

Comparing a gallon of heating oil and the amount of natural gas with the same energy content, 139,600 Btu, natural gas in Maryland has been cheaper in 10 of the last 12 years, according to BG&E. On average, oil was 19.8 percent more expensive than natural gas from 1980 to 1992. Only in 1986 and 1987 was oil cheaper.

Last year, the cost of a gallon of heating oil was 16.3 percent more expensive -- $1 compared to 86 cents for 139,600 Btu of natural gas.

But the Better Home Heat Council says oil has been just as inexpensive as gas if the efficiency of heating equipment is considered. Using an 80 percent efficiency rating for oil furnaces and a 71 percent rating for gas, the council said the price of oil was cheaper six years out of the last 12.

"One of the big things you have to factor in when you do any kind of comparison is the efficiency of the equipment," said Barry E. Kane, vice chairman of the council. "That is where the oil industry has had a much stronger success story, with higher efficiency equipment over the years."

But even using their own figures, the average price of oil from 1980 through 1992 was 7.9 percent higher than natural gas.

And the council's efficiency figures are based on equipment sold between 1978 and 1991. Today, equipment of equal efficiency is available for both natural gas and oil.

The cost for a heat pump is even tougher to figure out, because it is really two systems in one.

The main part -- which works like an air conditioner in reverse, extracting warm air from the outside -- is very efficient and cost-effective. But this system does not work when the temperature drops below about 40 degrees Fahrenheit. Below that temperature an electric heat system kicks in, which is expensive.

According to BG&E studies, heat pumps -- using traditional electric heat about 25 to 30 percent of the time -- are 5 percent to 10 percent less expensive than oil equipment, according to Bruce D. Dawson, director of conservation and energy management for BG&E.

Figures criticized

But the Better Home Heating Council criticizes the BG&E figures, saying they are based on ideal conditions. On average, the electric heat will cost more because of the location of the house, the numbers of windows or other conditions, the group says.

An advantage of a heat pump is that it is a combination heating and cooling system and is cheaper to buy than either an oil or gas furnace paired with a central air-conditioning system.

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