Analysis: What drives heating costs, efficiency for various fuel sources

Space heating consumes about 42 percent of a home's utility bill according to the most recent data from Building Energy Data Book 2011.

The data book notes that about 49 percent of U.S. household heating systems are fueled by natural gas. Another 34 percent comes from electricity and 14 percent a mix of propane/LPG, fuel oil, wood or other heat sources. In the data, the remaining 3 percent do not have or use heating equipment.

These sources of heating systems have progressed over the years as prices of nonrenewable and renewable resources fight to compete with each other while still reaching for efficiency.

Here's how some of the pricing factors can affect your utility bill in the winter months:

Nonrenewable resource energy:

The cost of natural gas depends on market supply and demand. On the end of supply, the amount of natural gas production, competition with other energy sources, the level of natural gas in storage and the volumes of natural gas imports and exports can all affect the price.

Demands, depending on the winter and summer weather, the level of economic growth and the availability and prices of other fuels, also affect the cost of natural gas. In 2015, daily prices fell to an average of $2.61 per million British thermal unit (MMBtu) for the first time since 2012 due to production and storage inventories hitting record levels as well as above-normal temperatures.

The U.S. Energy Information Administration (EIA) expects natural gas production to rise and the prices to drop in 2019 from the Henry Hub spot price of $3.27 per thousand cubic feet to $2.93 per thousand cubic feet.

According to the EIA, "burning natural gas for energy results in fewer emissions of nearly all types of air pollutants and carbon dioxide (CO2) than burning coal or petroleum products to produce an equal amount of energy."

However, natural gas is mostly composed of methane gas, a greenhouse gas. In 2015, natural gas leaks from wells, storage tanks, pipelines and processing plants "were the source of about 32 percent of total U.S. methane emissions and about 4 percent of total U.S. greenhouse gas emissions in 2015," according to the EIA.

The EIA estimates that about 5.7 million households in the U.S. use heating oil as their main heating fuel. This heating source is mostly used in the New England and Central Atlantic regions of America.

The factors of oil prices come from the cost of crude oil for refiners, cost for refiners to produce heating oil and cost to market, distribute and deliver the product to consumers.

Large winter storms and cold weather systems can also affect the prices through supply and demand, especially if the oil has come from different parts of the world such as the Gulf coast or Europe. The cost of transport is then added on to the building prices. Political events involving oil-supplying nations can also affect the supply.

The EIA offers short-term energy outlooks to predict the cost of future energy sources.

Obtaining oil, like natural gas, can involve a process called hydraulic fracturing, or fracking. There has been some debate over whether or not this is an ideal way to collect oil. The arguments for and against fracking range from considering the access to gas and oil that the process gives us to how it can contribute to water pollution.

According to the National Oceanic and Atmosphere Administration (NOAA), there have been at least 44 oil spills since the 1969 oil well blowout in Santa Barbara, California. Each of those 44 recorded spills each add up to over 10,000 barrels of oil lost, and NOAA lists the 2010 Deep Water Horizon well blowout as the largest one.

According to the administration, "even relatively small oil spills can cause major environmental and economic harm, depending on location, season, environmental sensitivity and type of oil."

The EIA notes that when oil wells become uneconomic and are plugged, some of the old offshore oil rigs are tipped over for a Rigs to Reef program. The idea is for the overturned rig to collect barnacles, coral and other sea creatures, creating an artificial reef to attract fish.

According to the Bureau of Safety and Environmental Enforcement, 532 platforms on the Outer Continental Shelf have been transformed into reefs as of April 15, 2018.

Electricity is a secondary source of energy, meaning it relies on other energy sources like natural gas, coal, nuclear or other sources to generate it. In residential units, the largest use of electricity is for cooling and air conditioning at 15.4 percent. Space heating accounts for 6.2 percent of the usage.

In 2017, about 92.7 percent of the coal consumed that year was used to generate electric power, generating only a third of electricity that year.

Since electricity availability depends on other fuel sources, the prices of those fuels affect the prices of electricity. According to the EIA, residential and commercial customers end up paying higher prices than other customers, industrial and transportation, due to the cost to distribute the electricity to them.

Availability of power plants, local fuel costs and pricing regulations can make a difference in pricing as seen when comparing prices of electricity. According to Choose Energy, Arkansas and Louisiana residents had an average price of 9.01 cents per kilowatt hour (kWh) while residents of Hawaii found themselves with the average price of 34.43 cents per kWh as of November 2018. Certain states may regulate the price of electricity from going above a set cost.

According to the EIA, fossil fuels, biomass and municipal and industrial wastes generated 64 percent of the total electricity generation in 2017. The emissions released when burning these fuels include carbon dioxide (CO₂), carbon monoxide (CO), sulfur dioxide (SO₂), nitrogen oxides (NO_x), particulate matter (PM) and heavy metals including mercury.

Coal, when burned, releases similar if not the same emissions. In 2017, CO₂ emissions from coal made up the highest share of the total CO₂ emissions for U.S. electric power.

Laws and regulations such as the Clean Air Act help to regulate air pollutant emissions, and programs like the Acid Rain Program set emission standards. The regulations have helped to reduce SO₂ emissions and filter out particles according to the EIA. There has also been a steady decrease in U.S. electric power carbon dioxide emissions, falling from 2,416 million metric tons of carbon dioxide in 2005 to about 1,750 by 2017 – about 72 percent.

Renewable Resource Energy:

According to a Levelized Cost of Energy 2018 analysis done by Lazard, a financial advisory and asset management firm, solar photovoltaic (PV) and wind energy are becoming more cost-competitive with natural gas.

Benefits from solar energy systems such as not directly polluting the air or producing carbon dioxide set it apart from natural gas as a heating source, but there are drawbacks as well. Solar power relies on the amount of sun that reaches the surface, which can vary depending on the weather.

Even with the growing competitiveness of solar energy, the cost of installing solar panels rises well into the thousands to tens of thousands of dollars.

The environmental cost comes from the production and disposal of the solar panels. Some toxic materials and chemicals go into the making of the panels, specifically the PV cells that convert sunlight into electricity and the fluids that transfer heat. The waste disposal regulations from the Federal Resource Conservation and Recovery Act (RCRA) currently govern the disposal of solar panels.

A report by the International Renewable Energy Agency (IRENA) estimates that if PV panel wastes are reused, recycled and "fully injected back into the economy," the value of the recovered material could reach over $15 billion by 2050.

The EIA recorded that in 2017 6.3 percent of total U.S. utility-scale electricity generation came from wind turbines.

According to the Office of Energy Efficiency & Renewable Energy, land-based utility-scale wind "is one of the lowest-priced energy sources available today, costing between two and six cents per kilowatt-hour, depending on the wind resource and the particular project's financing. That's cheaper than what the EIA reported for the average cost of electricity over the past eight winters, including the current one.

The Wind Vision Report published by the U.S. Department of Energy's Wind Energy Technologies Office found that not only could wind be "a viable source" of renewable energy across the U.S. by 2050, but by 2050, it could also potentially support over 600,000 jobs in manufacturing, installation, maintenance and supporting services.

Even though wind power is an emissions-free source of energy, it still cause environmental problems. Producing the turbines may involve the use of fossil fuels, and some have caused bird and bat deaths. To add, some people dislike the sound the turbines make while active.

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