Friday, December 26, 2014

 
SHORT SIGHTED PEOPLE SHOULD NOT BE POLICY MAKERS
 
I am going to begin with a simple example.  I have a 2000 square foot home and a 1/4 acre.  I admit I did put a lot of money down because I wanted a smaller monthly payment.  Today I cannot rent a nice two bedroom duplex for the price of my mortgage.
 
In most cases people do not put down as much as I did, but within a few short years they do realize the benefit of a locked in mortgage - which you hopefully pay off in 30 years. [I pay an extra $100 a month with a few lump sum payments here and there so I will pay off my mortgage by age 67]. 
 
As apartment and duplex rents go up five years after the purchase of your home, your mortgage is locked in with the exception of maybe a bit higher insurance rates or taxes.  But it does not take long to realize you can never rent for as cheap as your mortgage.
 
Yes, up front the investment is high, but in time your costs are cheaper than had you not made the investment.  This is the same as with our investment in Tenaska - all investment is high in the beginning with savings to come at a later date.
 
BUT NATURAL GAS IS ALREADY BRINGING US SAVINGS

I am not posting the chart I found because it is not dated, but the use of gas to run electric plans is lower than coal  [ the highest], nuclear energy and natural gas [about the same] and then oil and others - at the bottom.  The movement years ago from oil has been good for the US.  It has kept the price of oil from going up as demand goes down.

In the northern part of the country, people still use oil furnaces.  With the discovery of natural gas such as places like Ohio more and more people are converting from oil drip furnaces to heating their homes with NG.  Just google oil and Ohio - click   Google NG electric plants - they are building them all over the US - as more and more NG comes on line and more pipelines are being built, demand for oil will go down.  This means jobs.

Have you noticed the price of gas?

The move to NG has reduced our need for oil.  I agree NG is just one variable.  But every variable makes a difference.  We are all saving a ton on our gas bill.  Yes, in our case that savings is going to be taken by our increased rates for electricity.  So we break even - but we are also investing in our future.  In time our cost of electricity will be stable while people who still rely on drip oil furnaces to heat their homes will be subject to major roller coaster costs in oil.  Electric plants which still use oil will have to charge based on the constant changes in oil.  Also how much do you think it will cost for this plant in 10 years?

If you notice your BPUB there is a Fuel and Energy Charge.  Once we get all of our electricity from Tenaska or at least significantly reduce our dependency on  Oklaunion Power Plant, the FEC should go down.   Oklaunion Power Plant is a coal plant.    New regulations are costing coal plants to be constantly upgraded.  Further, new regulations are making the cost of coal to go up.

In the short run the cost of a new NG plant will be higher than an established coal plant, but such as a mortgage in time while the NG rate stabilizes as the  cost of investment remains the same, the cost of coal will continue to go up because of regulations. 

Now there is a down side - as the price of gas goes down the demand for NG goes down - but there comes a point where the price of oil cannot come down any lower because of costs to develop the wells. Do not hold your breath on gas remaining low for too long - the geopolitical ramifications are significant.  For now I believe the Saudi's are helping the US by not reducing production so as to increase costs in order to squeeze, Russia, Iran and Venezuela.  The policy will only hold so long  - so the sooner we move to NG the better.

WHAT YOU CAN DO

I just spent an additional $1,700 on energy efficiency on my home.  I did make a mistake - if you are going to replace the air conditioning ducts call the PUB first.  They come out and check to see how cold the AC is blowing before the replacement.  I only replaced 50 feet on the east side, but because I did not call the PUB first I will not get a rebate - it would have been very small anyway. Parts of the ducts had holes.  I could not get the east side of my home to cool the same as the west side.

I also had something put into my AC system to make it run more efficient.  We put the air I believe at 60, and it was tested at cooling at 55.  After 15 minutes the east side of he house was at 46, and the west was at 49.  The east side actually cools faster now than the west side.  Come summer my AC will run less since it is cooling the house faster.

I also had this solar run fan installed on the roof which pulls the hot air out of the attic.  If you get on the roof and feel the air being pulled out it feels like a furnace - this should help come summer.

We can sit and whine over the high short term cost of Tenaska without thinking of the long term benefits, which include lower gas bills for our cars because Tenaska means NG and not oil, or we can be proactive and make our homes more energy efficient.  But guys, I am telling you given how low gas is, I am still saving on my electric bill when offset by the price of gas.

Nothing is so simple as the cost of an upfront investment.  In time we will need to build another facility - would you rather wait ten years when the cost is higher?


CHECK IT OUT

Just google NG electric plants - they are being built all over the US - this is not some unique conspiracy to Brownsville. 

No comments: