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Where is Cheap Energy?

Posted: September 7, 2005

Selecting the best energy resources.

First of all, I’m sure everyone realizes by this time that “cheap” is a relative term when we are talking about energy today. I remember being aghast (probably about 32 years ago) when gasoline went over 40 cents a gallon. Then there was the trauma when gasoline hit the outrageous price of $1.00 a gallon about two or three years later.

Now we are facing prospects of fuel bills being about 30% higher than last year if we heat with fuel oil and about 50% higher if using natural gas. And these estimates are based on having a “normal” winter. If this winter is colder than normal, then the energy bill increases will be even higher.

Now that I painted the doomsday scenario, you should all realize the importance of using our energy resources in a cautious, informed manner. Which is the cheaper fuel when purchasing fuel for drying shelled corn: propane at $1.85 per gallon or #2 fuel oil at $2.20 per gallon? The only way to make a valid comparison is to examine the cost per million BTUs for each fuel and then compare. Use the downloadable spreadsheet at the web site http://extension.psu.edu/energy/energy-use to answer this question about propane and fuel oil and many other forms of energy.

On the screen that appears when you enter the web address, click on “Energy Cost Calculator.” Near the bottom of the next screen to appear, click on “Energy Cost Calculator – Excel Spreadsheet.” On the “Energy Costs” worksheet that appears, enter the current prices for propane, fuel oil, and any other fuels of interest. Be sure to read the footnote for the price of natural gas. A graphical comparison of the values for “Dollars per million BTU” is given on the worksheet “Graphical Comparisons.” In this case, the cost for 1 million BTUs from propane is $23.66 versus just $19.93 for fuel oil.

Another section of the web site “Energy Selectors” might be of interest. On the screen that appears, select “Propane” from one drop-down menu and “Fuel Oil” from the other dropdown menu. (Note: There is no difference between making a Propane vs. Fuel Oil selection or a Fuel Oil vs. Propane selection.). Then click on “Select.” The graph that appears gives the economic trade-offs between fuel oil and propane, based on the price of each. Be sure to read the accompanying text because that provides additional pertinent information.

I probably sound like a worn record, but we must all become more serious about energy conservation especially during this period of outrageous energy prices. The very cheapest energy is that energy that we do not use because of implementing cost-effective energy conservation measures.

Dennis Buffington, Department of Agricultural & Biological Engineering