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Location: Mars Hill, NC, United States

A small, highly personalized real estate firm specializing in mountain homes and land in greater Asheville.

Friday, September 14, 2007

Apples, Oranges, and The Cost of Different Heating Fuels

Looking for a home? Trying to compare heating costs in Asheville, or anywhere for different fuels? ..Gallons, cubic feet, and therms? How on earth?

A Smoother Transaction
Taking the time to calculate the costs for different heating fuels can be invaluable, for both sides of a real estate transaction. Maybe that electric home is not so bad when compared to the gas one.

Understanding such costs can assist in determining a home's true value, and hopefully, can make offers and counteroffers seem more realistic in the eyes of each beholder. Facts are always better than emotion in these affairs.

But it's like comparing apples to oranges....Or is it?
Different fuels are sold in various units of volume. This divergence is baffling, until we remember that all fuels ultimately do the same thing, they produce heat, and heat is a universal measure.

Heat is measured in British Thermal Units, (BTU's). It is NOT important for us to know what exactly a BTU is, but only to understand what is the cost per BTU, or a million BTUs, for the different fuel choices involved.

On these terms, a gallon of heating oil, a therm of natural gas, or a kWh of electricity are viewed not as diverse units of volume that defy financial comparison, but rather, in terms of $/BTU. So the comparison of two or three different heating sources, or homes for sale, now becomes an easy process using grammar school arithmetic.

Step One: How Much Heat Does Each Fuel Make?
There is wide agreement, (and why not actually?), on the BTU value of the major heating fuels in the US. The outbound links go into detail, but we have listed the BTU values below:
#2 Fuel Oil: 1 Gallon = 140,000 BTUs
Electricity: 1 kWh = 3,413 BTUs
Natural Gas: 1 Therm = 100,000 BTUs
Propane: 1 Gallon = 95,500 BTUs
Kerosene: 1 Gallon = 135,000 BTUs

Step Two: I'm Confused
Using the BTU values above, we can easily determine how many units of each fuel will be required to generate 1 million BTUs. Simply divide 1,000,000 by the number of BTUs for each fuel as follows:
#2 Fuel Oil: 1,000,000 divided by 140,000 BTUs = 7.14 gallons
Electricity: 1,000,000 divided by 3,413 BTUs = 293.00 kWh
Natural Gas: 1,000,000 divided by 100,000 BTUs = 10 Therms
Propane: 1,000,000 divided by 95,500 BTUs = 10.47 gallons
Kerosene: 1,000,000 divided by 135,000 BTUs = 7.41 gallons

Step Three: What's The Cost Already?
Your agent should have a good handle on the costs of each fuel in your area. For our exercise, we simply multiply the local price/unit by the number of units needed to make 1 million BTUs.

Here is an Asheville based snapshot to illustrate dollars per million BTUs.

#2 Fuel Oil: 7.14 gallons times $2.649 = $18.91
Electricity: 293.00 kWh times $0.089 = $26.08
Natural Gas: 10 Therms times $1.38 = $13.80
Propane: 10.47 gallons times $2.509 = $26.27
Kerosene: 7.41 gallons times $2.849 = $21.11

Step Four: You Forgot the Furnace
Those dollar values assume that the furnace in the house is 100% efficient, which it is surely not. EVERY home should have its heating hardware serviced on an annual basis, and when this is done, the efficiency is checked.

As such, there will be a sticker on the furnace which indicates clearly when it was last serviced, and what % efficiency the burner was rated at that time.

Therefore, to get the REAL $/million BTUs, the efficiency of the burner must be considered. This is done by taking the dollars/million BTUs above, and dividing by the efficiency rating. We have done this below, using typical ratings for modern burner units in Asheville.
#2 Fuel Oil: $18.91 divided by 85% efficiency = $22.25
Electricity: $26.08 divided by 100% efficiency = $26.08
Natural Gas: $13.80 divided by 85% efficiency = $16.24
Propane: $26.27 divided by 85% efficiency = $30.91
Kerosene: $21.11 divided by 90% efficiency = $23.46

So Natural Gas Wins?
Prices and availability of fuels are intensely local, and the "winners" will vary as such. In Asheville, the main natural gas supplier is PSNC, and their delivery infrastructure simply does not extend into every neighborhood. Best bet is to use a local human being for information.

The Wrap Up
So how much will it cost to heat the home we like?
Use this link to determine the average BTUs/sq ft for different climates. You can then use your own $/BTU calculations to more truly evaluate a prospective home based on its size.

That's a lot of money, how can we do better than that?
Use this link, courtesy of the FTC and the US DOE for various energy efficiencies related to the home and its purchase.

What's the deal with wood?
Use this link from Clemson University for various wood BTU equivalents.

Thanks for stopping by,
Black Bear Realty Website
828 689 2055
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Anonymous Electric Furnace said...

This also works for provisional furnaces including electric or gas wall furnaces. An electrical furnace would be plugged into a wall outlet, simply like supplementary electrical products.

4:47 PM  

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