A global energy crunch has been unfolding for months now, driving up the cost of oil and natural gas and creating an expensive problem for the roughly 60% of Vermont households that rely on fuel oil, propane, natural gas or other fossil fuels to heat their homes.
Government forecasters say the northeast could see a wetter winter with above-average temperatures. But the famed Farmers' Almanacsays the northeast should expect a colder-than-average season with lots of snow. But no matter the forecast, a New England winter will be cold and staying warm isn’t merely about comfort, but a matter of health and safety.
"What you’re seeing right now, with global oil and gas prices, is really the world coming out of COVID," said Seth Blumsack, a professor of energy policy, economics, and international affairs at Penn State University.
He says the dramatic expansion of oil and gas production in the U.S. in recent decades has kept fuel prices low. Now pandemic disruptions and fresh demand are sending shockwaves around the globe.
"The demand for energy globally has rebounded much faster than we expected, especially in Europe and Asia," Blumsack said. "These places don’t have the same level of energy production as the U.S. They are not global energy powerhouses the same way the U.S. is, and so they have to go out to global markets. And that has really been bidding up prices globally and what has been driving the energy price spikes that we’ve seen here in the U.S."
Just how much of a price spike for New England depends on how people heat their homes.
"Those of us who heat with propane or heating oil can expect to pay over 40% to 50% more than we did last year for heating."Elizabeth Wilson, Arthur L. Irving Institute for Energy and Society
"Heating oil is really a New England thing in the United States," said Elizabeth Wilson, an environmental studies professor at Dartmouth and director of the college’s Arthur Irving Institute for Energy and Society.
"Those of us who heat with propane or heating oil can expect to pay over 40% to 50% more than we did last year for heating," she added. "That's because the fuel prices are higher. That’s because it’s a little bit colder."
Vermont’s Public Utility Commission regulates electricity and natural gas providers in the state, which helps lock in the costs for those customers for a given year. This can soften the blow of sharp price spikes.
But three in five Vermont homes heat with oil or oil-based fuels like kerosene and propane, and there’s no such oversight on the cost of those fuels. That means they could face more significant price hikes.
"Because heating oil and propane are not regulated by our Public Utilities Commission, those resources will have that market volatility that is affected by markets and demand," Wilson said.
"And so customers who use natural gas or electricity, where rates are regulated, aren’t going to see the same year-on-year changes as customers who are using propane or heating oil, where that market volatility on international markets can really drive consumer costs," she added.
Blumsack said rising natural gas prices could eventually cause the cost of electricity to go up across New England, which could have knock-on effects for ratepayers in Vermont.
"Vermont’s power grid is not an island," he explained. "It’s really highly interconnected with the rest of the New England regional grid. And so while Vermont itself uses almost no natural gas for electricity, so it doesn’t produce very much electricity at all with natural gas or other fossil fuels, the rest of the New England grid does. So rising natural gas prices are going to increase the cost of generating electricity in the entire New England grid, which may result in some higher costs for Vermonters who use electric heat this winter."
"Highly efficient electric heating options ... may be good for your wallet, if prices for oil and natural gas stay high, and they're also going to be good for the planet, because they're very efficient, and they will use an increasingly decarbonized grid to heat your homes."Seth Blumsack, Penn State University
Regardless of how you heat your home, the global energy crunch means there’s even more reason to focus on efficiency: things like insulating your home, or making upgrades to use less energy to stay warm.
Wilson said Vermonters can get help, whether they rent or own their home.
"There are things you can do, in terms of air sealing, in terms of extra insulation," she said. "Efficiency Vermont... will help Vermont residents make their dwellings as efficient as possible. There are zero-interest loan programs, and all sorts of ways they’re trying help Vermonters make it through this hard time."
And Blumsack said a spike in fossil fuel heating prices actually provides a chance to think differently about how we keep our homes warm.
"In the longer term, one other opportunity that high prices for fossil fuels presents is to look at highly efficient electric heating options," he said. "These may be good for your wallet, if prices for oil and natural gas stay high, and they're also going to be good for the planet, because they're very efficient, and they will use an increasingly decarbonized grid to heat your homes."
With about a third of Vermont’s greenhouse gas emissions coming from heating our homes and buildings, aligning what’s good for the planet, and what’s good for Vermonters’ bottom lines, will be even more important if Vermont is to meet its goals for cutting carbon emissions.
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