Author Topic: New Gas Burner or Ride this Old Oil-burner to the GROUND  (Read 3559 times)

Honest Abe

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New Gas Burner or Ride this Old Oil-burner to the GROUND
« on: October 08, 2012, 04:28:34 PM »
I just bought this house a year ago... I have an oil burner downstairs that is more than 10 years old. I couldn't tell you the efficiency of it, but I do know that I burned 450gal last winter (I live in NY)

I actually have natural gas in my house. (The water heater and clothes dryer run on gas.) Should I fork over $4000 for a new gas burner that is more efficient or ride this oil burner out until it quits on me? (I only do COD oil drops of $100gal at a time in case this thing poops out)

Zaga

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Re: New Gas Burner or Ride this Old Oil-burner to the GROUND
« Reply #1 on: October 08, 2012, 05:17:56 PM »
We had an old-ish oil burner, and used about 700 gallons each winter.  That was after making the house much more energy efficient, it used to be 900 gallons minimum.  The bad part was the oil tank, those things are an environmental hazard waiting to happen, at least they are if they are underground and 50 years old!  So we made the switch, it has been a year and has been great on our pocketbooks so far!

ErinG

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Re: New Gas Burner or Ride this Old Oil-burner to the GROUND
« Reply #2 on: October 11, 2012, 05:57:32 PM »
There has to be some formula you can use. If you can estimate the cost of gas per heating season and figure out the difference between how much the oil costs, you can figure out how many years it would take to recoup your initial cost. Then, you would want to figure out what your theoretical return would be on that $4000 if you invested it elsewhere during that same time-frame to get a handle on the real difference. These things aren't my strong point but I'm sure if you can get some numbers on gas, someone here can guide you through the calc. If you can't get a reasonable estimate on what your gas bill will be, I don't think the question can be definitively answered. If you borrow the $ for the upgrade, my gut says NO way. Also, if you have debt, the 4k is probably better spent there.
I own a duplex with 2 oil burners that are ancient. I can't go to gas, no line in my neighborhood. Some neighbors have propane. If I had the $ in the bank to replace them, I would rest easy knowing that I can when the time comes, but I wouldn't run out and do it, based on my (unbased on any facts) belief that the $ in hand is better. I don't actually have the replacement $ and that itself is a source of worry.

I'm glad you asked this question - I would love to see the answers from the smarter than me people. I'm using around the same amount of oil as you.

Welmoed

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Re: New Gas Burner or Ride this Old Oil-burner to the GROUND
« Reply #3 on: October 11, 2012, 06:13:55 PM »
The winter forecast for low temps and high oil prices here in the mid-atlantic do have me concerned. We live in an old house with poor insulation, so heating costs are pretty high. Our furnace is 15 years old but still one of the highest-efficiency models out there. We do have the option of switching it to NG, and there is an NG pipeline within about 200 feet of the house now. But the gas company only covers the first 75 feet for free; the rest is on us. And rejetting the furnace will also be expensive. However, this might be the year to pull the trigger... Thanks for bringing it back onto my radar.

ErinG

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Re: New Gas Burner or Ride this Old Oil-burner to the GROUND
« Reply #4 on: October 11, 2012, 09:04:06 PM »
I found a calculator that coverts gallons of heating oil to therms. (Therms are apparently the unit you're billed for in natural gas).
http://www.convertunits.com/from/gallon+[U.S.]+of+residual+fuel+oil/to/therm+[U.S.]
450 Gallons of heating oil = 674.2295 therms

Here is the price of gas from a provider local to me:

https://www.nationalgridus.com/niagaramohawk/home/rates/4_gas.asp
There is a minimum charge of $17.85 for the 1st 3 therms. I assume one would get hit with that monthly. So 12 months x 17.85 = $214.20 for 36 of your 674 therms.
The next tier is .4189 for the next 47 therms. That's $19.68 per month. 19.68 x 12 = $236.26 and 564 therms. So we're up to 590 therms. 84 are left @ .06385 = $5.36.
214.20 + 236.26 + 5.36 = 455.82

This seems crazy cheap to me vs what I paid for oil. Maybe I'm doing something wrong or maybe there are fees and taxes not shown on the rate table. Maybe someone with a gas bill or better math skills can illuminate me.

This month's average for my oil provider was $3.777. 450 gal x 3.777 = $1,699.65.
Using my weirdly low gas cost and pretending prices are stable = $1244 annual savings. So if 4K is the total cost of the switch, it would be 3.2 years to break even. After that, your 4K pays you $1244 a year. I'm stuck on figuring a rate of return for that. It takes 3.2 years to get your investment back, so after another 11.8 years you earn $14,679 over a total of 15 years.
I honestly don't know how big a rate of return that is. Anybody want to fix my f'd up math or assumptions here?
Other important considerations, what is the lifetime of the new equipment before it needs replacement? 15 years total? So, invest 4K to earn $14,679 over 15 years. What happens if you put that yearly $1244 to work for you @ 5% (over the last 11 of 15 years), vs putting $4000 lump sum to work for you @ 5% for 15 years? I'm way over my head here. Somebody save me.


« Last Edit: October 11, 2012, 09:05:43 PM by ErinG »