Image: Heating-oil delivery man
Darren McCollester / Getty Image
John Cody from MacFarlane Oil delivers heating oil to a home in Boston. Due to strong demand for petroleum worldwide and tensions between Turkey and Kurdish seperatists in northern Iraq, the average price of heating oil in Massachusetts hit a record $2.75 a gallon, up 3 cents from a week ago.
updated 11/2/2007 2:50:04 PM ET 2007-11-02T18:50:04

With his furnace sputtering its final gasps, Charles Comito decided it was time to trade in his heating oil system for natural gas this year. The switch cost $4,400, a price he says will be worthwhile in the chilly months ahead.

"It was for the convenience and cost," said Comito, a 71-year-old resident of Little Egg Harbor, N.J., who lives in a three-bedroom ranch-style home.

With oil topping $90 per barrel, some homeowners are weighing whether the price tag for switching to a natural gas furnace makes sense. The decision may depend on a variety of factors, including the availability of natural gas lines, an issue in the Northeast, where gas pipelines have historically been less common.

Costs vary depending on the size and location of the home, but switching a typical three-bedroom house from heating oil to natural gas might run an average of $5,000 to $6,000. Removal of an oil tank, which some local governments offer rebates for, might run an average of $2,000 additionally.

Since early 2006, heating oil has been more expensive than natural gas and is currently nearly double the cost, according to Tim Evans, an energy analyst with Citi Futures Perspective. On Thursday, the price of crude oil, which has surged 20 percent in one month, reached a record of $96 per barrel.

While natural gas prices are also rising, the Energy Department says those who rely on heating oil will face much higher prices this winter, while those who use natural gas should only see a moderate price increase. Heating oil customers will pay an average of $319 more this winter than last, while natural gas customers are forecast to pay $78 more for heat between October and March.

Still, the monthly heating bill is just one of several factors to consider when weighing a switch from heating oil to natural gas. Not all areas have access to natural gas, and those that do would need to buy new equipment and have their local utility run a natural gas line to their home, which the company will typically do for free. Running the line may take up about four weeks, but the removal of old equipment and installation with natural gas furnace shouldn't take more than a day or two.

Heating oil is currently used by 7 percent of American households, mainly in the Northeast, while about 58 percent use natural gas and 30 percent use electricity. In 1997, 9 percent used heating oil, while 53 percent used natural gas and 29 percent used electricity.

Many homeowners first start looking for alternatives to heating oil because their equipment is old and cranky, breaking down frequently and sometimes even giving off odors and soot. Those with relatively new heating oil systems shouldn't experience such problems and may not find changing to natural gas is worth the cost.

Heating systems have an average life span of about 25 years.

Today's heating systems, whether for heating oil or natural gas, do burn fuel more efficiently than those built a decade or two ago. That could make investing in a new furnace attractive, even if the current one hasn't yet run its course.

Another major reason many consider switching is the risk of leaking oil tanks.

Cleaning up a leak could cost several thousand dollars, meaning many opt to have their tanks insured through either their heating oil suppliers, homeowner's insurance or independent insurers.

The removal and disposal of oil tanks must be handled by licensed contractors, with regulations varying region to region. That might tack on about $2,000 to the cost of changing to natural gas, bringing the total bill for a switch up to about $8,000. Some states or counties offer rebates for the removal of oil tanks.

For New Jersey resident Comito, trading in heating oil for natural gas was an easy choice since his boiler needed to be replaced anyway. His natural gas utility was also offering a discount promotion, considerably lowering the cost. The $4,400 price tag to switch to natural gas included permitting, new equipment, installation and removal of his oil tank. The entire process took less than two days.

Even if his equipment didn't need to be replaced, Comito said he would have switched to natural gas. He didn't like having to worry about whether his tank was full or if it would leak. Over the last few winters, he was also paying up to $2,000 a winter to heat his home.

Despite record oil prices this year, there are reasons to stick by heating oil, said John Maniscalco, a spokesman for the New York Heating Oil Association, which represents about 150 heating oil companies.

While there are hundreds of heating oil suppliers serving most regions, some areas may only have a single natural gas provider. That competition among heating oil suppliers, which are often smaller and family-run, means better service and more options, he said.

Maniscalco also pointed out that a good heating oil system is as efficient and hassle-free as a natural gas.

If your heating oil equipment is giving off any odor or soot, Maniscalco said it's time for a check up. If serviced properly once a year, risks of oil tank leaks should also be minimized, he said.

A steady stream of homeowners are nevertheless giving natural gas a second thought as oil prices continue to climb.

Over the last decade, about 35 percent of the 110,000 new customers at New Jersey Natural Gas Co. were residents or businesses switching from heating oil, said Bob Gallo, the company's marketing director.

"It's cleaner and more reliable," Gallo said.

One such resident is Colleen Gayduk, who switched from heating oil to natural gas in October five years after moving into her three-bedroom ranch. The oil equipment in her laundry room was so old it would leave a fine black dust over the washer and dryer. She worried it might aggravate her 11-year-old son's asthma.

On top of all that, oil was only getting more expensive.

"From when we moved in here, the bills were going up a little every year," she said.

Now, with her new furnace ready to go, Gayduk is expecting fewer worries over soot and smell _ and lower monthly heating bills to boot.

© 2013 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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