Posit: Electricity now cheaper than home heating oil

[MM]

I read on BoilerJuice.com that electricity is now cheaper than oil for home heating.

Comments?

(Oil price estimate today: 53.90 pence per litre for 10000 litres.)

MM

[Dave Liquorice]

Paid 48.85 last week just before a 2.5p price rise was applied (+ 5% VAT).

It's close, burn a litre of kero in and hour you get about 10kw of energy. So divide the p/l price by 10 for the cost/kwhr but that does not take into account boiler effciency or rather lack off...

[MM]

Thing is, the lecky companies have just increased their prices, so they are likely to remain the same for the foreseeable future. There would be a major political outcry if the companies increased the prices yet again, after the 12/14/17% increases. However, I reckon that heating oil is the Cinderella fuel that no one cares about. One never sees headlines about the massive hike in home heating costs with this fuel as one sees with gas and electricity. And so I firmly believe the oil price is likely to just keep on rising. And if the dollar still stays weak, then oil will soon become so exorbitant a luxury that the government will have a real crisis on its hands. I expect right now there are thousands of pensioners and others on low wages or on benefits who are borderline hypothermia cases already, especially as this winter has been (and continues to be) so miserable and cold.

I have decamped to my computer room, normally the smallest bedroom for families with a young child. But it costs a lot less to heat a box room with a fan heater than a relatively massive sittting room. At the moment I'm keeping nice and warm on around 8p an hour (thermostat on fan heater), plus the heat from the computer and UPS. Tomorrow, one of the computers is going to go, and I'll bring my bed in here as well.

MM

[Dave Liquorice]

Possibly, but I'm only paying 8.415p/unit for leccy, so with oil a

5p+/unit, not taking into account boiler inefficiency, the gap isn't very big.

Well no one uses it for heating do they? I wonder what the percentages are between gas, electric, solid and oil for space heating are.

This is true, I've had 4 deliveries of 2000l of oil since Jan 2007, each time the price has been significantly higher than the last:

Jan 2007 28.12 Jun 2007 30.25 7% rise Dec 2007 40.59 34% rise Apr 2008 48.85 20% rise

Overall a 73% rise in just over a year. So all you lot on mains gas squealing about a 20% rise, think again.

With diesel now hitting 115 to 120p/l and petrol about 6p lower there is going to be an helluva a pressure upwards on prices for everything. I hope they are thinking about it, they "delayed" the 2p/l duty hike on road fuels due on 1st April in the budget but it's going to take more than that to ease the pressure.

[Dieseldes]

When we installed an oil fired Stanley around 1997 our first fill of oil was 9.5p p/l around a £110 for the tankfill!! so that makes 550% increase in 11 years **** me that's hyperinflation!

Des

[MM]

Eh? (Splutter!)

Only 1.5 million households in the UK do!!

[MM]

Yep, and one of the neighbours said to me recently they'd just filled their tank at 50p a litre and the driver said the industry reckoned it would be a pound a litre by 2009. The drivers fear for their jobs as customers drop oil heating like a hot potato. Competition won't cut it, because the price is largely due to the weak dollar and Opec refusing to pump any more.

MM

[Dave Liquorice]

'Twas with tongue in cheek. But how many heat by Gas, 'lectric or solid Fuel? I've had a bit of a google but not found anything.

in a couple of places but what does one expect from a newspaper.

You can buy oil by installments, it's generally not offered as a method of payment as the price is, and always has been, rather volatile and not under control of the seller.

There is no "... 5 per cent duty on home heating oil for the elderly." or anybody else for that matter. There is no duty on home heating oil full stop. There is 5% VAT, just like all other domestic fuels.

[The Natural Philosopher]

All fuels are rising and keeping in step. Coal maybe not. Gas certainly. Except Uranium of course.

At some point that will, if enough reactors are built, cap electrity whilst fossil fuel stations are slowly shut down.

Its not really an OPEC issue, its more a dollar issue. Sadly our mortgage market is in as nearly a bad shape so the pound is tracking the dollar down.

[Dave Liquorice]

If so that has very serious implications on the price of road fuels, thi= nk

160+p/l for diesel and 150p+/l for petrol. The base oil cost of all fuel= s is pretty much the same, it's the the duty and VAT that give the price differences.

Such massive increases in such a short time don't let the economy adjust= . Things just stop happening as people and companies can't afford to do th= em any longer and make a profit.

150p/l is =A36.80/gallon (ish). Some one on or near the minimum wage and= working 15 to 20 miles from home has to work for over an hour just to pa= y for the fuel to get there. Another hour to pay the insurance, maintenace= etc. Probably another couple for deductions like Income Tax, NI & Pensio= n.

Oh look it's lunchtime and this worker still hasn't earn't any money to =

spend on *anything* else. Come the end of the day they might have =A325 = to spend on other fuel bills, housing, food...

But people still need to keep warm, what are they going to switch to? LP= G has increased, so has electricity. It's probably a fairly safe assumptio= n that mains gas is not available to the vast majority using oil for heating. People are caught between a rock and hard place.

This has me wondering they normally do pump more to control the price. W= hy aren't they doing so?

They know, but aren't letting on, that reserves are getting low. Making =

money whilst they still can.

They can't pump any more because they are already at full capacity, eith= er due to the various wars or oil fields running dry.

[The Natural Philosopher]

Its more a case of the fact that te dollar has fallen about 45% against everything, except the pound,which is more like 30%..that in itself adds

40% to oil prcies..add a little speculation on that, and you get the 2:1 uplift in the last 2 years ..give or take.

However apart from that I agree with your analysis. It's been called a 'perfect storm' of the global economy: at the time when free money suddenly vanishes - and interest rates should have gone up way before to limit money supply - we run into a resource crisis as well.

Stagflation is almost inevitable. Governments can only adjust interest rates and fuel taxation a little to lessen the shock, but in essence its the end of the beginning of a new world order.

One in which transport and movement of physical goods will dominate costs far more than it has done for years. Its probably the end of casual commuting, and the start of teleworking in serious way.

And with luck the end of consumerism as well.

*WE* have no real recourse but coal and nuclear power stations. And to become quite cunning about transport.

E.g. One thing that would help massively would be - say - institutionalised hitch hiking. At say 10p a mile. If ou could stick your thumb out at a bus stop or service station and be guranteed getting a lift withing 5 minutes, it would be way more efficient than any public transport scheme ever devised.

Make it politically incorrect to have an empty vehicle: and cut the number of cars by a factor of around 4.And still carry the same passengers.

The cost benefit of ripping a house guts out an insulating it properly - possibly with cheap government sponsored loans - would be overwhelming. So it would happen.

Ditto the costs of repair versus renew.

Dityo recycling versus dumping.

The New Austerity. Frankly, I think people would be HAPPIER.

[Tony Bryer]

One of the sort-of consolations of petrol duty being so high is that petrol prices changes in percentage terms are shielded somewhat from wild swings in the oil price, unlike in the USA. If the world oil price was to double again, I think that paying to refill heating tanks would be the least of people's worries.

Was watching a bit on TV this morning re a new crime, stealing oil from people's tanks:

(video clip)

[MM]

Well, unleaded petrol prices are around 106p per litre already in the Spalding area.

Definition of a crisis, no?

Maybe the oil companies are deliberately hitting the home heating victims, who do not have the same degree of exposure as electricity and gas consumers.

Already it's borderline whether electricity is actually cheaper than oil. In some parts of the country, especially if one is running short of oil and will soon need another refill, it probably is. So people will just buy a few cheap fan heaters and use them instead.

Another definition of a crisis! (Since consumers can do bugger all.)

MM

[MM]

What IS stagflation? I've heard of the term, but I don't really know what it is. Give some examples? Thanks.

MM

[MM]

In this day and age, you've GOT to be kidding! Who would ever risk either being picked up by a total stranger, or stopping to pick up a total stranger? That idea would never fly.

MM

[The Natural Philosopher]

It means inflation and a lowering of economic activity.

Normally inflation is a sign of there being too much money around, so easy to borrow, so too much money chasing too few goods. Cf teh housing market recently.

Stagflation is when the prices are not being directed by an increase in purchasing power and shortages: Just severe shortages. Think Zimbabwe.

Or post war reconstruction periods.

Its a period of 'wealth destruction' as savings/investments become relatively worthless.

Its happening roght now, although the signs are the banking crisis at least is drawing to a close. We still have the banks: they just aren't lending even tho rates have been held down top protect the guilty (existing mortgagees).

What has gone is the forward pricing on stocks and shares. Unless its mining or agriculture, there seems little prospect for 'jam tomorrow' and if there isn't that much jam today, the prices fall.

In short from around 7-8% expectations on investment, people are settling for 3% or so. With the blue chips unlikely to even return that, bonds look a good bet, but they are in limited supply as well, so their return is shrinking.

To put it another way, money, instead of being put into long term infrastructure that might actually make a decent modest return over a long period, has been given to people to buy overpriced houses that are not worth having at the price, and too spend on high street shopping which simply means throwaway rubbish. They can't pay it back, so the money has been 'destroyed'.

As consumerism grinds to a halt, those involved in it will have to raise prices to counter loss of volume. Or sack staff, or both. So less goods, costing more, and higher unemployment.

And with Nu Laber, higher taxation as well. Because if THEY start laying off staff, they won't win the next election. Well they wont anyway. People are finally bored with them.

Want to know what comes next? a Tory government that will rip into the public sector, and shed staff like there is no tomorrow. Probably with tax breaks for self employed and small companies, to help re-settle the almost useless into some form of gainful employment.

Plus a bit of rule alteration to allow entrepreneurs to go it alone.

With luck, a sliding scale of fuel duty to smooth out the bumps in the upward prices.

But the world just changed. We just haven't gotten used to it yet, that's all. It will take 15 years to get back on track in the new scenarios.

[The Natural Philosopher]

I do.

Last time I picked up a couple off Poles and drove them to their farm workplace. In a Jag!

I nearly always stop for hitch hikers. Been around the world a bit that way myself..

Most instructive.

[MM]

And extremely dangerous!

MM

[Dave Liquorice]

It's not new but has increased in recent times as the value of the oil has increased.

[Dave Liquorice]

er yeah? So a tank full (say 50l) currently costs =A353, at 150p/l your =

looking at =A375...