Big Run up in Heating Costs this winter - No urgency?

[begreen]

No crystal ball here, but the situation with Russia is not going away with Putin at the helm.

MSN

 

[ABMax24]

If one wants to point a finger, it should be at Putin and the crown prince.

If we want to be truly honest though we should also be looking in the mirror while doing the finger pointing. North American energy policy has contributed to this, the "no drilling, no fracking, no pipelines" policies have hindered domestic production. If North America was a net exporter of energy, a few simple export restrictions would reel in energy prices drastically.

I think this was even discussed in another thread a year or two ago, I brought up the concern of energy independence in relation to shale oil, and the general consensus seemed to be it was better to buy oil from Saudi with their $6/barrel production costs instead of the $40+ for shale oil. That seems to have aged like a glass of milk in the sun.

I really hope we don't follow the same path as we transition to renewables, it's great we can buy solar panels cheap from Asia, but do we really want to continue to place energy costs in the hands of foreign powers? Look at the calamity caused by the shortage of Asian microchips as a relevant example.

 

[woodey]

If North America was a net exporter of energy, a few simple export restrictions would reel in energy prices drastically.

Wouldn't that be counterintuitive to the goal of what many are trying to achieve?

 

[EbS-P]

If we want to be truly honest though we should also be looking in the mirror while doing the finger pointing. North American energy policy has contributed to this, the "no drilling, no fracking, no pipelines" policies have hindered domestic production. If North America was a net exporter of energy, a few simple export restrictions would reel in energy prices drastically.

I think this was even discussed in another thread a year or two ago, I brought up the concern of energy independence in relation to shale oil, and the general consensus seemed to be it was better to buy oil from Saudi with their $6/barrel production costs instead of the $40+ for shale oil. That seems to have aged like a glass of milk in the sun.

I really hope we don't follow the same path as we transition to renewables, it's great we can buy solar panels cheap from Asia, but do we really want to continue to place energy costs in the hands of foreign powers? Look at the calamity caused by the shortage of Asian microchips as a relevant example.

Unless we heavily subsidize entire products (like semiconductors) which will undoubtedly end up in a WTO dispute (which could have negotiated resolution) we will forever be at the mercy of the international markets. I don’t see the political will to tackle tariffs again. International Shipping costs going up may actually help US manufacturing.

You think any producer would willing want to under price their products. What ever administration put that through would have a near impossible time in the next election cycle.

Free markets are really the only answer and once we realize consumption does in fact influence prices give the consumer options. It’s a king term game and the name of it is peak oil. We can argue about the exact timing of the peak but really most all of us are going to live through it.

Get used to it. Insulate the crap out of your home. Get an EV for most of your daily commute. Get a heatpump that can cover 50-70% of you mr heating needs. It’s not cheap. Most of the population doesn’t have the 40-50k cash or credit enough to barrow to make those investments. But for those that do it’s now time to make those investments.

I’m going to try and get 1000-1500 sq ft of R-30 in the attic before summer is over. And air seal before that.

 

[ABMax24]

Unless we heavily subsidize entire products (like semiconductors) which will undoubtedly end up in a WTO dispute (which could have negotiated resolution) we will forever be at the mercy of the international markets. I don’t see the political will to tackle tariffs again. International Shipping costs going up may actually help US manufacturing.

You think any producer would willing want to under price their products. What ever administration put that through would have a near impossible time in the next election cycle.

Free markets are really the only answer and once we realize consumption does in fact influence prices give the consumer options. It’s a king term game and the name of it is peak oil. We can argue about the exact timing of the peak but really most all of us are going to live through it.

Get used to it. Insulate the crap out of your home. Get an EV for most of your daily commute. Get a heatpump that can cover 50-70% of you mr heating needs. It’s not cheap. Most of the population doesn’t have the 40-50k cash or credit enough to barrow to make those investments. But for those that do it’s now time to make those investments.

I’m going to try and get 1000-1500 sq ft of R-30 in the attic before summer is over. And air seal before that.

Yes we'd probably have to subsidize a few industries. The cost of doing nothing could be much higher though, China would never have to go to war with the west, restricting export of a few key goods would cripple the west. Very few products of importance are built without microchips.

I think any political party would get more support if they kept gas prices at $4 instead of allowing them to rise to $8 if oil prices surge, even if this alienated the oil and gas industry. The US economy has always performed at its best on cheap oil, period.

 

[EbS-P]

Yes we'd probably have to subsidize a few industries. The cost of doing nothing could be much higher though, China would never have to go to war with the west, restricting export of a few key goods would cripple the west. Very few products of importance are built without microchips.

I think any political party would get more support if they kept gas prices at $4 instead of allowing them to rise to $8 if oil prices surge, even if this alienated the oil and gas industry. The US economy has always performed at its best on cheap oil, period.

I’m am for taking on big oil! But remember how much LNG we are supplying or hope to supply to international markets. The market controls needed to set fossil fuel prices is OPEC. And the Saudis control that.

Is there any major commodity where price controls have work at the national scale in a democratic country? Milk maybe the only one I can think of that might come close and then it’s not so much a price control to keep prices lower but rules to set minimum prices and guarantee minimum incomes to producers. WW 2 ration cards??? But today that would just create a black market I think.

 

[begreen]

If we want to be truly honest though we should also be looking in the mirror while doing the finger pointing. North American energy policy has contributed to this, the "no drilling, no fracking, no pipelines" policies have hindered domestic production. If North America was a net exporter of energy, a few simple export restrictions would reel in energy prices drastically.

I think this was even discussed in another thread a year or two ago, I brought up the concern of energy independence in relation to shale oil, and the general consensus seemed to be it was better to buy oil from Saudi with their $6/barrel production costs instead of the $40+ for shale oil. That seems to have aged like a glass of milk in the sun.

I really hope we don't follow the same path as we transition to renewables, it's great we can buy solar panels cheap from Asia, but do we really want to continue to place energy costs in the hands of foreign powers? Look at the calamity caused by the shortage of Asian microchips as a relevant example.

Almost every developed country consumes more fossil fuels than it exports. Canada, Australia, and Norway are the only developed economies that produce more fossil fuels than they consume. If we really want to point the finger it should be at our per capita consumption of fossil fuels. A diet here wouldn't hurt.

Edit: this may already be happening as major distributors are noting that high fuel prices are causing demand destruction.

 

[EbS-P]

WTI below 100$ today. Put it all on black I say! They house always wins in the long run.

 

[Ashful]

Just got home from the gas station. $241 and change to fill my 1/2 ton pickup and a few gas cans for the mower. That's a new personal record for a single fill-up, but not high enough to change any habits... yet.

 

[woodey]

Just got home from the gas station. $241 and change to fill my 1/2 ton pickup and a few gas cans for the mower. That's a new personal record for a single fill-up, but not high enough to change any habits... yet.

I filled my pickup and a few cans last week and it cost me a mere $182.

 

[Ashful]

I filled my pickup and a few cans last week and it cost me a mere $182.

I think my truck was only $135. The rest was gas for the zero turn, and a few gallons of diesel for the tractor.

The zero turn mower is my biggest consumer of gasoline, by a long mile. That says a lot, considering the smallest motor among my three cars is 5.7 liter.

 

[Ashful]

I think my truck was only $135. The rest was gas for the zero turn, and a few gallons of diesel for the tractor.

The zero turn mower is my biggest consumer of gasoline, by a long mile. That says a lot, considering the smallest motor among my three cars is 5.7 liter.

Quoting myself now, but I should have added that there are a few new companies making zero turn EV mowers ("EM's"?), but so far I've seen nothing that could compete with ICE's on cost and quality, for a homeowner with a few acres. They're all way too expensive, and those I've seen have had to go thin on mower deck or other components, in some feeble (but still badly failing) attempt to balance their insane weight. Their weights are roughly double that of any size and speed comparable gasser, even with the thinner and cheaper decks and frames, which is a serious problem in our part of the country where you're likely to sink your zero turn in mud for nearly half the mowing season.

I did some cost comparisons, and for a commercial operation, they're actually nearing parity with gassers. This is based on fuel savings and lost hours/days for maintenance, on the (not completely realistic) assumption the EV's will never break or have any down-time. Unfortunately, the cost savings proposed by manufacturers of the EV mowers still make completely unbelievable claims, ignoring the actual real-world trade-in frequency of zero turn mowers used in commercial applications. This behavior may have the undesirable effect of discrediting their claims too quickly for buyers in commercial applications.

I'm starting to see homeowners buy them in the 48" size, despite their cost, which is a good sign, and will hopefully drive more development toward better 60" commercial products.

 

[begreen]

I had to fill up our car after a run around Seattle for errands and dinner. The cost was 2 hrs of sunshine. Love the Volt.
Mowing is our big cost for gas too. I am letting the fields grow longer. We are heading into our dry period and it will go brown soon.

 

[vinny11950]

I am sure some of you have seen this already, but in case other's haven't.

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[peakbagger]

I am sure some of you have seen this already, but in case other's haven't.

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Thanks, It would be interesting to list the new capacity added since then. My guess is it would not balance out.

BTW I ran into a article today with a good news bad news prediction, Good news $65 oil by next year Bad news economy in a major recession.

 

[begreen]

I am sure some of you have seen this already, but in case other's haven't.

Interesting thread. Didn't the head of Chevron say earlier this year that there would be no new refineries built in the US?

 

[ABMax24]

Here's some data from the EIA, backs up the loss of 1.1 million bpd of refining capacity since the beginning of Covid.

U.S. refinery capacity decreased during 2021 for second consecutive year - U.S. Energy Information Administration (EIA)

www.eia.gov

 

[vinny11950]

Interesting thread. Didn't the head of Chevron say earlier this year that there would be no new refineries built in the US?

I had not heard that, but it would make sense. Refineries are long term investments, so I imagine they don't want to invest in something that will quickly depreciate as more consumers switch to electric vehicles.

One solution would be for the federal government to give them juicy subsidies to keep those plants going. However I don't know if that is technically possible. But throw enough money at something and things get done.

On the price of oil, so much of the price swings we see now are just being driven by speculation from big investment funds taking big bets. I don't really see it as price discovery. Instead it just looks more like big money chasing returns. As interest rates climb, those bets look more risky because now there is a more secure alternative to make those returns. You can see the higher rates already bursting different types of asset bubbles.

 

[Poindexter]

I think Vinny is partly right about big money. I am a little tiny fish, but with enough in the market to have 5-10% of my portfolio in precious metals. There are some really really big fish out there with nothing better to do than move their money around between gold and stocks and oil. And they are buying land hand over fist with their free cash flow.

On the one hand speculation introduces fluidity and allows markets to function, but Vinny is partly right in that some of this is driven by old guys on their yachts thinking they know everything worth knowing and using that knowledge to make enormous transactions instantly. But the fundamentals also suck.

My fundamental problem is my body is getting old faster than the climate in Fairbanks is warming up. My wife just started a new job in a new field, that she really likes, about 8 months ago. We are in a home with a fixed rate mortgage that is great for raising kids, but no good for aging in place. Our plan is to keep the current house to next spring, and then decide if we are staying in Fairbanks or moving to the lower 48. By keeping the house our equity is inflating along with everything else.

The number of US dollars in existence doubled during the pandemic. If you got a mattress full of Benjamins, they are going to be worth half of what they were worth pre-pandemic when this is done shaking out. If I were to cash out of the stock market today I would look at three things.
1. land I could buy a flat, ready to build lot in Fairbanks, close to the hospital and close to two grocery stores, close to utilities, with adequate garden space. It would be one more thing to deal with before we move to the lower 48 if we end up going.
2. Precious metals. Gold is the classic inflation hedge. A good suit for a man has cost one ounce of gold since Henry VIII was on the throne. Silver is primarily an industrial metal, so good underlying demand. Lead, but good luck storing it and shipping is extravagant. I looked at buying a small farm in SE Missouri back when I was a bachelor (and had money) so I could warehouse lead in the barn, but decided against.
3. Chinese rimibi. Not traveler's checks backed by the full faith and credit of AmEx, actual Chinese bills. Last I looked you needed to drop minimum US$1000 and wait until the banknotes came in the mail to pick them up from your local AmEx office. If the Chinese ever float that thing holders of actual bank notes backed by the China government will profit.
4. If my home was suitable for aging in place I would do everything I could to make my home island-able and get it paid off.
5. solar I am looking at what a few solar panels could do for the house we are currently in. Honestly it seems like the best thing I could do is buy solar panels now, keep them in the garage and install them in the next place if we stay in Fairbanks, or sell them if we move south.

I am probably addicted to/ dependent on oil. I could bicycle to work (7 miles one way) for a few months of the year. Keeping a dog team, probably six dogs, so I could commute in the winter months with no oil is problematic as there is no parking or yard space for dogsleds and dog teams at my office. Even with no veterinary bills, the break even point on a dog team is tricky, and the time commitment is enormous. I am not sure I could keep 6 sled dogs on my suburban lot without a neighborhood uprising, and there would be veterinary bills. I could likely get good dogs free at the local animal shelter, and I know three competitive mushers, but the dogs have to eat and need to be worked every day; even if I am riding a bicycle to work, running a small garden and trying to be a Godly husband.

Local most of my electricity is generated by burning coal. The utility does have a wind farm. They burn some naptha and some natural gas, but it is pretty much coal.

Cross country skiing 14 miles daily is not happening.

I could get a snowmachine and park in the motorcycle area, but emissions from 2 cycle engines are atrocious. Bringing groceries home on a bicycle is problematic. With gas at $4/gallon I pretty much did whatever whenever. With local gas now at $6/ gallon, a 50% increase, I do plan my trips. I think this is going to get worse before it gets better. The main thing I can see that would help would be to get over the red/blue thing and start electing centrists with heads on their shoulders that know how to work as team members.

 

[peakbagger]

I think Vinny is partly right about big money. I am a little tiny fish, but with enough in the market to have 5-10% of my portfolio in precious metals. There are some really really big fish out there with nothing better to do than move their money around between gold and stocks and oil. And they are buying land hand over fist with their free cash flow.

On the one hand speculation introduces fluidity and allows markets to function, but Vinny is partly right in that some of this is driven by old guys on their yachts thinking they know everything worth knowing and using that knowledge to make enormous transactions instantly. But the fundamentals also suck.

My fundamental problem is my body is getting old faster than the climate in Fairbanks is warming up. My wife just started a new job in a new field, that she really likes, about 8 months ago. We are in a home with a fixed rate mortgage that is great for raising kids, but no good for aging in place. Our plan is to keep the current house to next spring, and then decide if we are staying in Fairbanks or moving to the lower 48. By keeping the house our equity is inflating along with everything else.

The number of US dollars in existence doubled during the pandemic. If you got a mattress full of Benjamins, they are going to be worth half of what they were worth pre-pandemic when this is done shaking out. If I were to cash out of the stock market today I would look at three things.
1. land I could buy a flat, ready to build lot in Fairbanks, close to the hospital and close to two grocery stores, close to utilities, with adequate garden space. It would be one more thing to deal with before we move to the lower 48 if we end up going.
2. Precious metals. Gold is the classic inflation hedge. A good suit for a man has cost one ounce of gold since Henry VIII was on the throne. Silver is primarily an industrial metal, so good underlying demand. Lead, but good luck storing it and shipping is extravagant. I looked at buying a small farm in SE Missouri back when I was a bachelor (and had money) so I could warehouse lead in the barn, but decided against.
3. Chinese rimibi. Not traveler's checks backed by the full faith and credit of AmEx, actual Chinese bills. Last I looked you needed to drop minimum US$1000 and wait until the banknotes came in the mail to pick them up from your local AmEx office. If the Chinese ever float that thing holders of actual bank notes backed by the China government will profit.
4. If my home was suitable for aging in place I would do everything I could to make my home island-able and get it paid off.
5. solar I am looking at what a few solar panels could do for the house we are currently in. Honestly it seems like the best thing I could do is buy solar panels now, keep them in the garage and install them in the next place if we stay in Fairbanks, or sell them if we move south.

I am probably addicted to/ dependent on oil. I could bicycle to work (7 miles one way) for a few months of the year. Keeping a dog team, probably six dogs, so I could commute in the winter months with no oil is problematic as there is no parking or yard space for dogsleds and dog teams at my office. Even with no veterinary bills, the break even point on a dog team is tricky, and the time commitment is enormous. I am not sure I could keep 6 sled dogs on my suburban lot without a neighborhood uprising, and there would be veterinary bills. I could likely get good dogs free at the local animal shelter, and I know three competitive mushers, but the dogs have to eat and need to be worked every day; even if I am riding a bicycle to work, running a small garden and trying to be a Godly husband.

Local most of my electricity is generated by burning coal. The utility does have a wind farm. They burn some naptha and some natural gas, but it is pretty much coal.

Cross country skiing 14 miles daily is not happening.

I could get a snowmachine and park in the motorcycle area, but emissions from 2 cycle engines are atrocious. Bringing groceries home on a bicycle is problematic. With gas at $4/gallon I pretty much did whatever whenever. With local gas now at $6/ gallon, a 50% increase, I do plan my trips. I think this is going to get worse before it gets better. The main thing I can see that would help would be to get over the red/blue thing and start electing centrists with heads on their shoulders that know how to work as team members.

Assuming it is still going to snow enough to need one, here is a solution to your winter time transportation issues (broken link removed to https://www.taigamotors.com/products/ekko). My guess is you may see more of them offered. For someone like me that likes wildlife, having a quiet way of cruising the woods is quite attractive.

 

[EbS-P]

Fear of recession seems to be prevalent. Other than a housing bubble what factors are driving these fears? Oil is down on those fears (so they say) but this is what I’m not buying the down turn is forecast for late 2023. Inflation is up, I get that, but unemployment is down demand for goods is up. Birth rate is not falling as fast as it was might even be rebounding. Corporate balance sheets have been cash heavy for awhile.

Oil prices are either going up or down and that depends on Russia and the economy.

refining capacity will not see meaningful increases IMO. Government won’t subsidize green house emitters unless climate change deniers take control of government.

Time to make some choices. If we really really want to move the gas price down we will change habits. Live closer to work. Get an EV. Put your kids on the school bus (pickup lines are one of my biggest pet peeve’s). Invest in electric busses. Get a heatpump. Pellet boiler?? Heat pump hot water heater (even in colder climates) Solar still makes sense and will as long as natural gas prices stay higher. Adopt very high efficiency building codes.

 

[sloeffle]

Came across this article yesterday.

We’re heading for a messy, and expensive, breakup with natural gas

In the UK, it would require almost a year's annual salary to do your bit for climate change and energy security.

www.engadget.com

 

[EbS-P]

Came across this article yesterday.

We’re heading for a messy, and expensive, breakup with natural gas

In the UK, it would require almost a year's annual salary to do your bit for climate change and energy security.

www.engadget.com

Well written. Though I might argue that a house with a condensing gas boiler and insulation retrofits is not the best candidate for energy upgrades. Reducing consumption was not discussed. I want to see what the energy consumption could be curtailed to. Nor was a mini split to provide supplemental heat discussed. We can’t treat this as an all or nothing process. Every bit will help.

We need to accept to get through this there will be days that we might not be comfortable. House slippers, hats and fingerless gloves might just need to become normal or more likely, those that can afford increased prices will just absorb the cost.

I get the sense that the author won’t install a heatpump, I wouldn’t either until system needs replacement or the cost of gas really makes it a good financial choice to switch to electric.

 

[sloeffle]

Reducing consumption was not discussed. I want to see what the energy consumption could be curtailed to.

Most folks don't generally discuss that because that means they would need to change how they live. People "fall into a groove" on how they like to live and don't want to change their lifestyle.

From a personal perspective I swapped out a standard electric hot water heater for a HPHW. That greatly lowered my electric consumption but I realized after a week or so, back to back showers after my ex-wife ( hers were scalding hot ) were a no go. I learned real fast to give it a few hours. At that time, it saved me roughly $50 a month so it was well worth the inconvenience.

I get the sense that the author won’t install a heatpump, I wouldn’t either until system needs replacement or the cost of gas really makes it a good financial choice to switch to electric.

I agree fully.

 

[peakbagger]

The trick is in many cases for folks to look at life cycle costs. The American consumer has been trained to look at first cost of energy using appliances instead of the life cycle cost that take into account how long it is going to last and how much energy does it use over its life. The Energy Star program has been quite successful in raising overall energy efficiency, but I still expect the typical consumer would rather get an optional icemaker than pay a bit more for a refrigerator that is more efficient.