Equipment Cost of Conversion:
Cost of Converting from Traditional Oil to BioHeat: NO COST
In this category, BioHeating oil is the clear winner. BioHeating oil can be used in your existing heating equipment, with absolutely no modifications whatsoever. Because BioHeating oil is a blend of petroleum based oil and BioDiesel, it can be mixed with oil already in your tank with no problems.
Cost of Converting from Heating Oil to Natural Gas: $6,000 – $16,000
An oil to gas conversion cost can range anywhere from $6,000 – $16,000, depending on your home, your needs, and your current oil equipment. If you have not already done so, you should check out the “Convert From Oil To Gas” website. The figures here are fairly accurate, and they provide a lot of helpful tools and considerations to help you make a decision. It is always important to consider how long you plan on living in your home before making any large and costly changes like this.
What if your heating equipment is oil & dated, or needs replacing anyway?
Unless your decision is driven by equipment failure, it‘s rarely financially cost-effective to switch from one fuel source to another no matter which direction you go (converting from oil to gas or gas to oil). When considering new equipment, keep in mind that oil furnaces have an average life expectancy of 30 years, whereas it‘s about 15 years for gas furnaces. Typically the cost to upgrade your oil furnace is around $4,000. And you skip the costs of running new gas lines (around $2,000) as well as the cost of removing your old oil tank ($800 – $2,000).
Price Difference – Yearly Fuel Costs:
Natural Gas has recently been cheaper than heating oil, at least for the past 5 years. So, it’s important to put this “yearly savings” into the bigger picture, to determine the possibility of long term savings by converting from oil to gas. Below is a brief timeline looking at historical price differences. As you can see, the price has swung back and forth between oil and gas for 25 years now. In the early 80s, natural gas was cheaper than heating oil. There was a big push for everyone to “convert & save money!”. About 5 years later, the prices swung again, and heating oil held a price advantage for about 20 years. Then, around the 2009, the price swung again in favor of natural gas. Now, about 6 years later, heating oil prices are falling, and approaching parity in many markets with natural gas prices. Will the swing come full circle again? Will we have another 20 years of low oil prices? Who knows. The future is uncertain. That’s the main reason why converting between fuel types based on price differentials is very rarely a profitable venture. Let’s put the yearly savings you might gain in cheaper gas prices in perspective, and compare them to the initial cost of conversion, to try to find a “break even” point. This would be the point at which you’ve saved enough money on fuel to pay for your equipment conversion.
Can you save money by converting from oil to gas?
Yes. You can also make millions playing the stock market. And surprisingly, the two choices are remarkably similar. Here’s why. Let’s say you have a heating oil to gas conversion cost of $8,000. You would need to “save” enough on your monthly heating bills to break even on this upfront investment, and then beyond, before you actually start “saving” any money. How much you could save per month depends on how cold the winter is, the price of BioHeating oil or heating oil, the cost of natural gas, including taxes and delivery fees, etc.
For example, let’s say that you decide to convert from oil to gas. This winter, you save $600 in heating costs by using natural gas instead of heating oil. Alright! IF everything remained the same (no price fluctuations, average temperatures, etc.), then it would take you 13 years to even break even on the initial investment of oil to gas conversion costs. What if we have an outrageously cold winter and the price of heating oil soars? Now let’s say you saved $1000 this winter! Awesome! Now all you need is 7 more years of that identical situation, before you even break even on money you already laid out up front. And then from there – you might actually start saving some money. Are you beginning to see why we compare oil to gas conversion to playing the stock market? Your “calculated” savings, is a function of the economy, fuel prices, weather, and many factors, all being “stable” for at the very least over 5 years. No one can guarantee you that, as much as the gas company would like to convince you that they can! The large initial cost of an oil to gas conversion is a risky one.
Now, if that sounds like a chance worth taking – by all means do it! This is not meant to make it sound like a bad idea. Try telling the guy who made $2 million playing stocks that it was a bad idea! What we want to help you understand is that it’s a GAMBLE. It’s risky. No one knows if you will make your investment back, let alone save any money. Our purpose is to keep you INFORMED. Not discourage you from making the honestly right choice for yourself. Still have questions about your home? Give us a call. We can talk through your specific situation and honestly help you evaluate the best option for you.
Thinking of Converting? Get all the FACTS!
Oil heat vs. gas heat – the answer to this question becomes clearer when you throw BioHeating Oil into the mix. It’s time to part ways with traditional petroleum based heating oil. Get the FACTS. Learn about ALL of your conversion options. Choose the BEST fuel type available to heat your home.
Read our full article to find out how the two fuel types stack up in terms of cost, efficiency and cleanliness, renewability, safety, and much more! Get all the facts here: “BioHeating Oil vs. Natural Gas”.
*Image courtesy of Salvatore Vuono at FreeDigitalPhotos.net.
