After months of stonewalling, the agency finally published residential energy cost data. Electricity now costs 3.5 times more per Btu than natural gas.
Thanks for another great article Robert. Will you, or someone else among the commenters, please explain how the cost per btu for electricity is 3X natural gas, yet the heating costs calculation is only 1.75X. I can imagine different assumptions regarding conversion efficiency, types of systems, etc.
I think the difference is related to what type of heating equipment is assumed. The first chart, the DOE Energy Equivalent Residential Energy Cost, does not appear to include a factor for efficiency of the heating appliance. It's just heat content of the fuels. For a million BTUs of natural gas heat content, divide by 100,000 and you get 10 therms. Multiply by $1.30 / therm and you get $13. For a million BTUs of electric heat content, divide by 3,412 and you get 293 kwh. Multiply by $.16 /kwh and you get $47. In a real application, you need to divide by the efficiency of the appliance. For a 95% nat gas furnace, divide $13 by 0.95 and you get $13.68. An electric resistance heater has an efficiency of 100%, so divide by 1.0 and we still have $47. But a heat pump has an efficiency of about 2.0 (if it's not too cold), so $47/2.0 = $23.50. By this calculation , a heat pump compared to a gas furnace would cost about 1.7 times as much. That might be how the 3.5x became 1.75.
I can't give you the explanation you seek. To me the key takeaway is that both sets of figures (the residential energy cost & winter fuels outlook) show heating with gas is cheaper. The other takeaway is that these are the DOE's own figures. Not mine. And they are publishing them at the same time the agency is siding with the anti-gas NGOs.
Those who espouse “electrification” are fixed on the concept of free energy; that is, wind and sun, and are driven by the goal of “net-zero” (herein referred to as simply nut-zero). Instead of these things, we need to focus on what is sustainable, not what is desirable. Is it sustainable to use energy sources that are diffuse, intermittent, and unreliable to pursue a goal (nut-zero) that is of marginal value?
First, and foremost, we must accept the fact that the economy is a derivative of energy, a principal first voiced by Doomberg! Without energy, there is no economy. Before Carnot’s and Watt’s revelations, our economy was based on beaver skins, cotton and tobacco, and whale oil. Livestock and grains were not traded--they were needed for subsistence. A farmer grew enough to feed 3 to 5 people. Because of Mr. Fulton, Mr. Diesel, and Mr. Ford, that farmer now feeds over 160 people, and our world would be unrecognizable to Mr. Adams or Mr. Jefferson.
So long as we pursue energy policies that rely upon diffuse and intermittent resources, the economy will continue to exhibit inflationary growth and uncertainty. Nut-zero is an impractical, unreachable example of sloganeering. (I know I am likely preaching to the choir, but its Sunday...:)).
For those who are just now emerging from hibernation or return from their summer visits to alien worlds, we are facing an election in about three weeks. Both parties have done their best to convince us that theirs is best for the country, and have filled the airwaves with superfluous "issues" that, in the long run, have absolutely no impact on our ability to thrive and flourish as an economy or as individuals.
Of all of the rhetoric I've seen, heard, or read, only those posted by environMENTAL on 25 Sep 2024, "Record Trumps Rhetoric," stand out as the essence of the choice we Americans face. Those words appeared in "Record Trumps Rhetoric," by enviroMENTAL, posted on 25 September 2024:
"If you believe that the greatest threat facing humanity is “climate change”, that nonreliables like wind and solar are the solution, that modern industrial economies can simply switch out hydrocarbon fuel sources for wind/solar at cost parity and without sacrificing living standards, and that such policies have only positive and no negative consequences, your choice for President is clear. VP Harris’ policies align with your views. If you believe the contrary, and that living standards and the economy are derivatives of affordable, reliable, abundant, on-demand energy, your choice is equally clear...we believe one candidate has a far greater likelihood of understanding the domestic, geopolitical, social, and economic consequences of U.S. energy and environmental policies than the other. And like him or hate him, that candidate is as obvious as the nose on your face. Or the frosted orange on his head."
About all the "environmental" NGO's and donkey politicians deliberately saying electrify everything will "lower energy costs!", we ask the question yet again...
Robert, thanks for another great article. For comparing heating costs, does the EIA data specify if electric heat is delivered by heat pump or resistance heater? In my neighborhood (BPA electricity), natural gas is much cheaper than electric resistance heat, but heat pumps are close to gas cost when the temps are above 45 deg. I still much prefer natural gas. The quality of heat is better, the furnace is more reliable than a heat pump, and I can use my gas fireplace when the elec power is out.
Thank you Robert! For reference, in the UK energy prices are regulated and not determined by a market, and are subject to a price cap by the regulator OFGEM.
We also have an odd form of democracy: whereas in China the CCP (Chinese Communist Party) is always in charge, here it's the UKCP (United Kingdom Crazy Party) - there are elections, changes of personnel, but craziness differing only in detail.
You might have thought that the UKCP, propounding an electric utopia, would have stumbled on the notion that with an electricity price just over 3.9 times that of natural gas, the take-up of heat pumps would be somewhat sluggish.
“Governor” Abram’s is well positioned to enjoy the benefits of electrification, most of which will be handed out to grifters in the form of tax free donation and payments for consulting services. Like homeless funding the money will be stolen by politically connected leeches. None of the rest of us will see any benefit at all.
When Chilean media recognizes that weather dependent energy is an “excretable” policy it really shows how out of touch with reality our “mainstream” media has become. Thanks for all you do to provide the charts and graphs that pedestrian folks like me can use with friends and neighbors.
I always enjoy your insights, Robert. In 1976, My folks built a relatively modest one story home on the central coast of California. My Dad was sold on the future of electrical ceiling heating over the natural gas heating we were accustomed to. Temperatures below 32 degrees F are rarely seen on the central coast but it gets chilly in the winter, especially with the winds off the ocean. The electric bill exploded upward. In the hundreds of dollars a month which was crushing for a young middle class family in the 1970s. The heating was kept off and we wore jackets from then on. It was used only in the rarest of circumstances. The electric water heater was kept on though with four teenagers so the bill remained on the high end. Electric costs in California are going much, much higher. Individual freedoms there are going to be much more constrained. My thinking on this is it will pass, with much unnecessary suffering, over the next decade or two. It feels to me to be much like the 1970s in many ways. True especially in Cali but across the larger USA as well. My bet is that 2040 will see a much more efficient and ecologically sensitive application of our energy resources. If anything, humanity will demand it and objective truths will dictate it. Just my own two cents.
talks about "Figure 25: PG&E, SCE, and SDG&E Current and Projected Residential Average Monthly Bills, Year-End 2023 – Year-End 2027 Typical Customer Living in a Moderate and Hot Climate Zone." A typical PG&E customer in a hot zone will be paying just under 400 bucks a month for electrical service in 2027.
We are in the calm before the storm. As more solar energy is added to the grid, electricity prices will rise. At some point they start to rise exponentially. I show this in my new solar model. https://schlanj.substack.com/p/the-hidden-costs-of-solar-power
Soon, even operating an EV will cost more than an ICE vehicle. This happens at about 37 cents/KWh. It’s already happened at high speed charging stations. The big selling point of EVs is that they are cheaper to drive, but this is contingent on electricity prices staying low.
Imagine trying to supply high temperature thermal heating to industry with resistance heaters powered by solar/wind. No savings from heat pumps at higher temperatures. Industrial heating costs could rise 10x or more, even before CO2 reduction targets are met. Say goodbye to industry if we go down that road. Thermal heating from nuclear plants can compete with gas once we get the cost of nuclear down.
The only way this stupidity stops, IMO, is when there is a catastrophic grid collapse somewhere during a harsh, or even slightly colder than normal winter, affecting millions of people for a long period of time, where there can be no doubt that the root cause was replacing reliable energy sources with weather dependent and unreliable energy. Electrifying everything is only possible if we eliminate wind and solar from the energy mix and go to natural gas, or preferably, nuclear, to power the grid. Of course, if such a grid collapse occurs, politicians and the corrupt media will spin the blame on greed or some other nonsense, and true believers will continue to claim that if we just had more wind and solar, the collapse could have been avoided.
I hope we don't see a grid collapse. But the electrify everything push ignores the massive cost of trying to upgrade the grid so it can provide the staggering amounts of energy that are provided by the gas grid and the motor fuel sector. As I have explained before, during the coldest days of winter, the gas grid delivers twice as much energy as the electric grid delivers during the hottest days of summer.
I enjoyed this, Robert, but would inject a qualification. I'm not sure how closely average consumer costs are coupled to natural gas spot prices. That said, the most important of those (Henry Hub) has spent the last two years at long-term lows. Some gas producers take losses at these prices.
The reason prices are low is that production ramped up. This was in part in anticipation of new LNG export capacity, which has been coming on more slowly than expected. And on top of that we just had two very mild winters in a row. Winter won't stay that warm (hello La Nina) and new export capacity will more than double by 2028, from projects already approved and underway. At more than 24 Bcf/d, it will then be a significant fraction of US production.
So just don't go overboard with your victory lap. Those 3x to 4x differences for 2023 and 2024 could soon be half as large or less.
Interesting though that NG prices have been low since 2009, and even with the Feb 2021 cold snap, NG only rose to approx 5 per mmbtu for a month. It would take an order of magnitude change in NG prices to match energy equivalent price of electricity. NG exports have doubled since 2020 with continued low prices. Not sure what the tipping point will be in exports or weather but, while not a victory lap, it seems that more than a cold winter and expected increased exports will be needed to impact this calculus.
The information is clear for anyone (or any news organization) to see. And yet, people continue to listen to politicians either stupid or attempting to attract voters who don’t care about facts
It's the election season - politicians and media lies are all they can hear. Remember - the only natural resource that is truly inexhaustible is stupidity!
But, of course it’s cheaper and to those that belong to the Church of Climate (TM), cost is totally and wholly irrelevant. You think Al Gore (who uses 24 times more energy than the average American) cares about cost? He flies on private planes, like the stupid, silly, and annoying John Kerry, milking the super rich for more money for his companies which has made him millions.
Electricity will be cheaper than Nat Gas until the gov’t figures out how to tax Nat Gas to parity and blame corporate greed.
Thanks for another great article Robert. Will you, or someone else among the commenters, please explain how the cost per btu for electricity is 3X natural gas, yet the heating costs calculation is only 1.75X. I can imagine different assumptions regarding conversion efficiency, types of systems, etc.
I think the difference is related to what type of heating equipment is assumed. The first chart, the DOE Energy Equivalent Residential Energy Cost, does not appear to include a factor for efficiency of the heating appliance. It's just heat content of the fuels. For a million BTUs of natural gas heat content, divide by 100,000 and you get 10 therms. Multiply by $1.30 / therm and you get $13. For a million BTUs of electric heat content, divide by 3,412 and you get 293 kwh. Multiply by $.16 /kwh and you get $47. In a real application, you need to divide by the efficiency of the appliance. For a 95% nat gas furnace, divide $13 by 0.95 and you get $13.68. An electric resistance heater has an efficiency of 100%, so divide by 1.0 and we still have $47. But a heat pump has an efficiency of about 2.0 (if it's not too cold), so $47/2.0 = $23.50. By this calculation , a heat pump compared to a gas furnace would cost about 1.7 times as much. That might be how the 3.5x became 1.75.
I can't give you the explanation you seek. To me the key takeaway is that both sets of figures (the residential energy cost & winter fuels outlook) show heating with gas is cheaper. The other takeaway is that these are the DOE's own figures. Not mine. And they are publishing them at the same time the agency is siding with the anti-gas NGOs.
Those who espouse “electrification” are fixed on the concept of free energy; that is, wind and sun, and are driven by the goal of “net-zero” (herein referred to as simply nut-zero). Instead of these things, we need to focus on what is sustainable, not what is desirable. Is it sustainable to use energy sources that are diffuse, intermittent, and unreliable to pursue a goal (nut-zero) that is of marginal value?
First, and foremost, we must accept the fact that the economy is a derivative of energy, a principal first voiced by Doomberg! Without energy, there is no economy. Before Carnot’s and Watt’s revelations, our economy was based on beaver skins, cotton and tobacco, and whale oil. Livestock and grains were not traded--they were needed for subsistence. A farmer grew enough to feed 3 to 5 people. Because of Mr. Fulton, Mr. Diesel, and Mr. Ford, that farmer now feeds over 160 people, and our world would be unrecognizable to Mr. Adams or Mr. Jefferson.
So long as we pursue energy policies that rely upon diffuse and intermittent resources, the economy will continue to exhibit inflationary growth and uncertainty. Nut-zero is an impractical, unreachable example of sloganeering. (I know I am likely preaching to the choir, but its Sunday...:)).
For those who are just now emerging from hibernation or return from their summer visits to alien worlds, we are facing an election in about three weeks. Both parties have done their best to convince us that theirs is best for the country, and have filled the airwaves with superfluous "issues" that, in the long run, have absolutely no impact on our ability to thrive and flourish as an economy or as individuals.
Of all of the rhetoric I've seen, heard, or read, only those posted by environMENTAL on 25 Sep 2024, "Record Trumps Rhetoric," stand out as the essence of the choice we Americans face. Those words appeared in "Record Trumps Rhetoric," by enviroMENTAL, posted on 25 September 2024:
"If you believe that the greatest threat facing humanity is “climate change”, that nonreliables like wind and solar are the solution, that modern industrial economies can simply switch out hydrocarbon fuel sources for wind/solar at cost parity and without sacrificing living standards, and that such policies have only positive and no negative consequences, your choice for President is clear. VP Harris’ policies align with your views. If you believe the contrary, and that living standards and the economy are derivatives of affordable, reliable, abundant, on-demand energy, your choice is equally clear...we believe one candidate has a far greater likelihood of understanding the domestic, geopolitical, social, and economic consequences of U.S. energy and environmental policies than the other. And like him or hate him, that candidate is as obvious as the nose on your face. Or the frosted orange on his head."
My two cents, adjusted for inflation.
Excellent post, Robert.
About all the "environmental" NGO's and donkey politicians deliberately saying electrify everything will "lower energy costs!", we ask the question yet again...
Is it ignorance or is it malevolence?
Robert, thanks for another great article. For comparing heating costs, does the EIA data specify if electric heat is delivered by heat pump or resistance heater? In my neighborhood (BPA electricity), natural gas is much cheaper than electric resistance heat, but heat pumps are close to gas cost when the temps are above 45 deg. I still much prefer natural gas. The quality of heat is better, the furnace is more reliable than a heat pump, and I can use my gas fireplace when the elec power is out.
Thank you Robert! For reference, in the UK energy prices are regulated and not determined by a market, and are subject to a price cap by the regulator OFGEM.
We also have an odd form of democracy: whereas in China the CCP (Chinese Communist Party) is always in charge, here it's the UKCP (United Kingdom Crazy Party) - there are elections, changes of personnel, but craziness differing only in detail.
You might have thought that the UKCP, propounding an electric utopia, would have stumbled on the notion that with an electricity price just over 3.9 times that of natural gas, the take-up of heat pumps would be somewhat sluggish.
“Governor” Abram’s is well positioned to enjoy the benefits of electrification, most of which will be handed out to grifters in the form of tax free donation and payments for consulting services. Like homeless funding the money will be stolen by politically connected leeches. None of the rest of us will see any benefit at all.
Just upgraded to paid Robert. While I am cheap and didn’t want to, I couldn’t bear not seeing your weekly analysis of energy. Great work!
When Chilean media recognizes that weather dependent energy is an “excretable” policy it really shows how out of touch with reality our “mainstream” media has become. Thanks for all you do to provide the charts and graphs that pedestrian folks like me can use with friends and neighbors.
Thanks.
I always enjoy your insights, Robert. In 1976, My folks built a relatively modest one story home on the central coast of California. My Dad was sold on the future of electrical ceiling heating over the natural gas heating we were accustomed to. Temperatures below 32 degrees F are rarely seen on the central coast but it gets chilly in the winter, especially with the winds off the ocean. The electric bill exploded upward. In the hundreds of dollars a month which was crushing for a young middle class family in the 1970s. The heating was kept off and we wore jackets from then on. It was used only in the rarest of circumstances. The electric water heater was kept on though with four teenagers so the bill remained on the high end. Electric costs in California are going much, much higher. Individual freedoms there are going to be much more constrained. My thinking on this is it will pass, with much unnecessary suffering, over the next decade or two. It feels to me to be much like the 1970s in many ways. True especially in Cali but across the larger USA as well. My bet is that 2040 will see a much more efficient and ecologically sensitive application of our energy resources. If anything, humanity will demand it and objective truths will dictate it. Just my own two cents.
Glad you don't live in one of the hot zones in the state.
Pg 75 of this report-
https://www.cpuc.ca.gov/-/media/cpuc-website/divisions/office-of-governmental-affairs-division/reports/2024/2024-sb-695-report.pdf
talks about "Figure 25: PG&E, SCE, and SDG&E Current and Projected Residential Average Monthly Bills, Year-End 2023 – Year-End 2027 Typical Customer Living in a Moderate and Hot Climate Zone." A typical PG&E customer in a hot zone will be paying just under 400 bucks a month for electrical service in 2027.
Wow! The hot zones are cold zones in the winter, some very cold. Dangerous and sad. I left in 1986. Good decision. 5th generation Californian.
We are in the calm before the storm. As more solar energy is added to the grid, electricity prices will rise. At some point they start to rise exponentially. I show this in my new solar model. https://schlanj.substack.com/p/the-hidden-costs-of-solar-power
Soon, even operating an EV will cost more than an ICE vehicle. This happens at about 37 cents/KWh. It’s already happened at high speed charging stations. The big selling point of EVs is that they are cheaper to drive, but this is contingent on electricity prices staying low.
Imagine trying to supply high temperature thermal heating to industry with resistance heaters powered by solar/wind. No savings from heat pumps at higher temperatures. Industrial heating costs could rise 10x or more, even before CO2 reduction targets are met. Say goodbye to industry if we go down that road. Thermal heating from nuclear plants can compete with gas once we get the cost of nuclear down.
The only way this stupidity stops, IMO, is when there is a catastrophic grid collapse somewhere during a harsh, or even slightly colder than normal winter, affecting millions of people for a long period of time, where there can be no doubt that the root cause was replacing reliable energy sources with weather dependent and unreliable energy. Electrifying everything is only possible if we eliminate wind and solar from the energy mix and go to natural gas, or preferably, nuclear, to power the grid. Of course, if such a grid collapse occurs, politicians and the corrupt media will spin the blame on greed or some other nonsense, and true believers will continue to claim that if we just had more wind and solar, the collapse could have been avoided.
I hope we don't see a grid collapse. But the electrify everything push ignores the massive cost of trying to upgrade the grid so it can provide the staggering amounts of energy that are provided by the gas grid and the motor fuel sector. As I have explained before, during the coldest days of winter, the gas grid delivers twice as much energy as the electric grid delivers during the hottest days of summer.
I enjoyed this, Robert, but would inject a qualification. I'm not sure how closely average consumer costs are coupled to natural gas spot prices. That said, the most important of those (Henry Hub) has spent the last two years at long-term lows. Some gas producers take losses at these prices.
The reason prices are low is that production ramped up. This was in part in anticipation of new LNG export capacity, which has been coming on more slowly than expected. And on top of that we just had two very mild winters in a row. Winter won't stay that warm (hello La Nina) and new export capacity will more than double by 2028, from projects already approved and underway. At more than 24 Bcf/d, it will then be a significant fraction of US production.
So just don't go overboard with your victory lap. Those 3x to 4x differences for 2023 and 2024 could soon be half as large or less.
Interesting though that NG prices have been low since 2009, and even with the Feb 2021 cold snap, NG only rose to approx 5 per mmbtu for a month. It would take an order of magnitude change in NG prices to match energy equivalent price of electricity. NG exports have doubled since 2020 with continued low prices. Not sure what the tipping point will be in exports or weather but, while not a victory lap, it seems that more than a cold winter and expected increased exports will be needed to impact this calculus.
That may be true. But gas has, for decades, been 3x cheaper than electricity. I just did a bit more research:
In 2000, gas was $6.88, Elec: $23.53
1990, gas $5.46, Elec: $23.09
1987, gas: $5.62, $23.27
The information is clear for anyone (or any news organization) to see. And yet, people continue to listen to politicians either stupid or attempting to attract voters who don’t care about facts
Is it ignorance or malevolence?
Do they hate FFs so bad that they would lie to the electorate and knowingly drive up their costs while pretending they were doing the opposite?
Asking for a friend....
It's the election season - politicians and media lies are all they can hear. Remember - the only natural resource that is truly inexhaustible is stupidity!
But, of course it’s cheaper and to those that belong to the Church of Climate (TM), cost is totally and wholly irrelevant. You think Al Gore (who uses 24 times more energy than the average American) cares about cost? He flies on private planes, like the stupid, silly, and annoying John Kerry, milking the super rich for more money for his companies which has made him millions.