Page 26 - Oil and Energy-February 2013

rates in liquids and nat gas, particularly in
Lower 48 states. With profitability for U.S.
domestic oil producers very high and no
change in sight to U.S. rules preventing
crude oil exports, we expect [West Texas
Intermediate crude (WTI)] prices to con-
tinue to lag international prices. Indeed, we
see a risk of WTI temporarily falling to $50/
barrel over the next 24 months to force a
slowdown in supply growth or a change in
crude oil export rules.” WTI crude is now
priced at about $86 per barrel. A decrease
to $50 a barrel would represent a 42 percent
price reduction.
Customers who are thinking of switching
fuels to get a lower price would do better
to stay with oil and enjoy the anticipated
effects of a growing domestic supply.
TALKING POINT NO. 3:
Homeowners get much
better service with Oilheat
Summary: Full-service Oilheat provides
exactly what a homeowner needs to be
comfortable, safe and energy efficient. With
natural gas, customers rely on utilities,
which value individual accounts less and
have a terrible track record on customer
service.
Details: Full-service Oilheat dealers offer
the best customer service package available
for home comfort, bar none. Forged in a
highly competitive marketplace, full-service
dealers are customer service specialists who
provide every aspect of system maintenance
and care that customers need, along with
energy conservation know-how. When a
customer chooses one company for both
fuel and service, they have all the expertise
they need just a phone call away, and they
have clout. A prompt, thorough response
to any heat emergency is virtually assured,
because the dealer is highly motivated to
protect the fuel account.
With gas heat, the customer generally
loses both convenience and clout. They
must make arrangements with separate
providers for fuel and service, and they lose
clout on the equipment service side, because
their accounts have much less monetary
value – and the service-only provider has
less at stake.
Converting to natural gas also makes
the customer dependent on a utility that
may have a terrible track record for serving
customers in times of need. Many customers
in the Northeast are served by National
Grid, which has been under heavy fire for
its performance following Hurricane Sandy
and other major storms.
Two weeks after Sandy hit on October
29, New York Gov. Andrew Cuomo formed
a special commission to investigate the
performance of the Long Island Power
Authority (LIPA) and its contractor for
repair recovery work, National Grid. A
recent story by WNYC radio said that LIPA
and National Grid “weren’t prepared for and
didn’t adequately manage the recovery.”
Peter Schlussler, a member of the LIPA
Oversight Committee, told WNYC that
National Grid hasn’t received the public
scrutiny and blame it deserves for the slow
restoration process. “I believe they abso-
lutely should be held just as accountable,”
he said.
National Grid is also under heavy fire
in Massachusetts for its handling of damage
in two major storms in 2011. The state
Department of Public Utilities recently fined
the utility a record total of $18.7 million for
its non-performance, which included failing
to deploy an adequate number of crews to
restore power and a general failure to pre-
pare and organize for the October storm.
TALKING POINT NO. 4:
Natural gas has serious
environmental problems
Summary: Switching from heating oil
to natural gas is not a “green” move, and
it does nothing to help the environment.
Natural gas production and delivery are
linked to serious environmental problems
including climate change, and natural gas
companies tolerate ongoing leaks that are
far more extensive than the public record
indicates.
Details: Utilities promote natural gas as the
eco-friendly alternative to heating oil, but
a growing body of scientific evidence tells
a very different story. A team of Cornell
University researchers focused attention on
natural gas pollution in 2011 by publishing
a study showing that extracting natural gas
from the Marcellus Shale could do more to
aggravate global warming than mining coal,
due to the leaks of raw methane, which is
the principle component of natural gas.
Cornell reported that methane has 105
times the Global Warming Potential (GWP)
of carbon dioxide in the short term, and
that as much as 8 percent of the methane
in shale gas leaks into the air during the
lifetime of a hydraulic shale gas well. “The
take-home message of our study is that if
you do an integration of 20 years following
the development of the gas, shale gas is
worse than conventional gas and is, in fact,
worse than coal and worse than oil,” said
lead researcher Robert Howarth.
A recent study by the National Oceanic
and Atmospheric Administration (NOAA)
and the University of Colorado in Boulder
lends credence to the warnings from
Cornell. Researchers tested the air near
a gas-drilling site in Utah and identified
a leakage rate of 9 percent. That figure is
nearly double the cumulative loss rates
estimated from industry data. “We were
expecting to see high methane levels, but
I don’t think anybody really comprehended
the true magnitude of what we would see,”
says Colm Sweeney, who led the aerial com-
ponent of the study as head of the aircraft
program at NOAA’s Earth System Research
Laboratory in Boulder.
As if the losses during production
aren’t bad enough, natural gas also enters
the atmosphere through myriad leaks in
natural gas pipelines and distribution sys-
tems. The Conservation Law Foundation
(CLF) recently reported “enormous envi-
ronmental and economic consequences”
from “aging, leaky natural gas pipes around
Massachusetts.” In November 2012, Boston
University Associate Professor Nathan
Phillips announced he has discovered
3,300 leaks in underground gas pipelines in
Boston alone.
While scientists are exposing natural
gas as an eco-fraud, the heating oil industry
is transitioning to cleaner fuels that truly
reduce pollution, including ultra-low sulfur
heating oil and Bioheat®.
To stay on top of the latest news
about heating oil and natural gas, visit
the American Energy Coalition website at
americanenergycoalition.com.
Natural Gas Talking Points
26 • OIL&ENERGY