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The Trust About Heating Oil - Response to ''We The Six Billion''

November 25, 2009 The full truth about heating oil in Maine and other states today was conspicuously absent from Joe Steinberger's November 19 installment of We the Six Billion, "The Ammonia Economy."

Mr. Steinberger doesn't explain why he does "not doubt that increasing demand for oil, combined with its limited supply, is bound to make it more expensive over time, and that Maine's dependence, especially on heating oil, is a disaster in the making."

Let's look at the facts. Nearly every year since the development of oil, oil consumption has increased. Despite more and more demand, prices have not risen consistently. While history shows that consumer products get more expensive over time, heating oil actually cost consumers less now than it did in the 1980s when adjusted for inflation. Furthermore, retail heating oil prices have increased about half as much as prices for other consumer products, according to the U.S. Bureau of Labor Statistics.

Energy prices on the whole are volatile, but recent history in Maine and elsewhere shows that heating oil prices are stable and heating oil supplies are plentiful in a market with attractive fundamentals for consumers. That's why the U.S. Energy Information Administration in October projected that heating oil prices in the 2009-2010 winter are expected to be lower than they were in the 2008-2009 winter.

On the same day The Free Press published "The Ammonia Economy," the Wall Street Journal reported that mild weather has removed "a potential pop" for heating oil prices. "Now, heating oil's fate rests solely on winter demand, and forecasts look likely to disappoint market bulls."(WSJ, 11/19/09)

To Mr. Steinberger's credit, he questions the assertion from his column's main subject, author Matt Simmons, who became wealthy by investing in oil and now claims "peak oil" is coming sooner than is believed by governments in the United States and many other countries, on alternatives to heating oil.

Mr. Simmons' interest in innovative alternative energy technologies is laudable, but he needs to understand more of what's going on with today's heating oil.

For example, Maine BioProducts is developing a project at an existing paper mill that can produce 300 million gallons of completely renewable heating fuel, called ethyl levulinate, each day. Made from saw dust and other cellulosic wastes through a simple chemical process, this product could be blended with heating oil. It has low greenhouse gas emissions, can be delivered to homes and businesses with existing infrastructure, and it will keep jobs in Maine.

The use of ethyl levulinate would complement the heating oil industry's embrace of BioheatŪ, a blend of heating and biodiesel oil made from soybeans and/or other plants. About 300 oilheat retailers in the Northeast, including many Maine dealers, are already selling Bioheat containing up to 20 percent biodiesel.

The heating oil industry is also working to install renewable solutions. Hundreds of solar water heaters have been installed in Maine homes and businesses by Maine energy marketers. Add-on solar hot water systems are simple to install on existing oil burners. Solar water heaters cut emissions and heating costs.

Aside from what's happened in Maine and other states because of solar technology advances, the National Oilheat Research Alliance and the New York Energy Research and Development Authority are studying and developing new appliance designs. One of which will be a flame powered heat pump allowing efficiencies over 100 percent. Another is designed to put solar receptors in the furnace, and allow the flame of the oil burner to both heat the house and provide electricity.

Mr. Simmons, also apparently an energy trader, should know that if we are going to run out of heating oil in five years as he asserted, being cold will be the least of our worries. There will be no trucking of food and goods since heating oil is diesel fuel, and all of our cars will no longer move, and airplanes will be grounded. Let's not fall for his hyperbole but do what can be done now. Current oilheat technology boiler and furnace technology can reduce homeowners' fuel consumption in Maine 30 to 40 percent and cut their emissions. Adding biofuels and solar hot water to the mix further reduces fuel use and greenhouse gas emissions. Simple equipment upgrades to increase oilheat systems' efficiency and weatherize homes and offices provide the best bang for the buck. These are real solutions that have real paybacks.

Jamie Py, president, Maine Energy Marketers Association, Energy Communications Council member

John Huber, president, National Oilheat Research Alliance, Energy Communications Council

Read ECC's response in this letter published by The Free Press.

National Oilheat Research Alliance ECC is funded in part through the National Oilheat Research Alliance.