NDL Hearth Blog

A roadmap to avoiding economic disaster in Maine and the other regional states.

Maine, USA -- Maine, New Hampshire, and Vermont have a unique and overwhelming dependence on home heating oil for heat. Dependence on heating oil drains money and jobs and tax revenues from Maine and its sister states. Their dependence on heating oil has already eroded their economies; and that dependence has the potential to destroy the foundations for growth and prosperity as they export more and more of their disposable income to places that are far away.

Maine Depends on Oil to its Economic Detriment

Recent data from the U.S. Census shows that 75.61% of Maine’s homes use #2 heating oil. This is by far the highest proportion of heating oil dependency of any state. The table below shows this fact and also shows that Maine has very limited access to natural gas (3.68% of homes).

Because of these states’ heavy reliance on heating oil, these states are the most petroleum dependent states in the United States (with the exception of Hawaii). See Figure 2, below.

Maine “exports” about $720,000,000 per year in what I call our “oil tax” because Maine homes use about 300 million gallons per year of heating oil and, according to the EIA’s Home Heating Oil Report for 2010, 78% of every dollar spent on heating oil leaves the Maine economy. If that money were to stay in the Maine economy it would produce about 41,000 new jobs that do not currently exist.

(Note: 41,000 jobs is based on an average annual pay and benefits of $37,000 and multiplier effects estimated by FutureMetrics. Job multipliers are based on detailed multiplier tables, by state, from the National Renewable Energy Laboratory, The Jobs and Economic Development Impact (JEDI) Model, revised in 2009. The multipliers’ aggregate increase in final demand is also modified by an assumed 35% tax rate. The median income of $37,000 is from the US Census, 2008. The 35% tax rate is an assumption that includes all taxes that reduce consumption (including but not limited to real estate, sales, income, and excise taxes. This job number does not include any new jobs created by the production of regionally produced fuel such as wood pellets.)

It’s important to consider where heating oil prices will be in 3 to 5 years so that Maine and its neighboring states can plan to mitigate the current and potential negative economic impacts that accrue from this addiction to heating oil.

Will Heating Oil Prices Increase?

Forecasting energy prices with any precision is impossible. However, trends in price movements over time can be estimated.

Heating oil is distilled from crude oil and therefore crude prices, along with domestic demand characteristics for distillate fuels (which include heating oil, diesel fuel, and jet fuel), strongly affect heating oil prices.

The relationship between economic growth and oil prices can be used to estimate future price trends. Based on expected growth rates for global gross economic product, FutureMetrics has estimated the expected crude oil price from 1999 to 2015. The chart below, which is difficult to read on this site, shows that expected prices will increase to at least $175 per barrel by November 2014.

Overall, while heating oil prices may fluctuate over time, the trend will be for increases. The expected price of crude suggests that Maine could see heating oil prices of $4.50/gallon over the winter of 2012-13.

What is the Effect of Higher Heating Oil Prices on Maine and the Region?

What would happen if heating oil reaches the price seen in 2008 (about $4.50/gallon)? A $1.50/gallon increase in heating oil prices from $3.00/gallon adds another $358,000,000 to Maine’s “oil tax.” That loss of disposable income will destroy another 20,700 jobs and would raise the current unemployment rate of 7.29% to 10.26%. (Note: my employment data is from the Maine Department of Labor, November 2010. The increase in the unemployment rate assumes that the civilian labor force remains at the November 2010 level of 696,360. Maine’s labor force has been falling slightly since 2007 (2008 average was 705,258, 2009 average was 704,134, and the 2010 average through November was 699,596.)

Jobs and businesses will suffer; but so will the governments of these states. The loss of more than 20,000 jobs in Maine will lower tax revenues. The state of Maine averages about $5,200 in total tax income per employed resident, according to the Maine Department of Labor and the Maine Budget Office.

The loss of 20,700 jobs would lower tax revenues and that loss would reduce state tax revenue by almost $106 million annually. That is a 3.21% drop in annual tax revenues. At the same time, the demand for services would increase as the increase in heating oil costs disproportionally burdens the poor.

Can the Region Transition off of Heating Oil?

There is a solution to the problem that can not only lower heating costs dramatically but can also eliminate the dependence on heating oil; and that solution can also keep the money spent on fuel in the local economy and stop our exporting hundreds of millions of dollars and destroying tens of thousands of jobs. The solution is to use fuel from our own forests and from dedicated energy crops grown on fallow land.

Maine is the most forested state in the United States and Maine sustainably harvests more than 16 million tons per year of wood from its forests (PDF). New Hampshire and Vermont have less forested land but Vermont has enough non-cultivated cropland that is idle from the decline of the dairy farm sector to grow more than 1.5 million tons per year of woody biomass from dedicated fuel crops. For more on the topic of land availability, see the sidebar at the bottom of this article.

The residential wood pellet fueled boiler experience in Europe can guide Maine and its sister states away from their dependence on heating oil. Pellet fueled boilers are different than pellet stoves. They are fully automatic (fuel and ash handling) and comparable to any modern home heating system for emissions. Whereas most homes in the U.S. that use pellets have stoves, most homes in Europe that use pellets have boilers.

Pellet fuel is also much cheaper than heating oil and propane.

The potential advantages of harnessing the region’s woody biomass fuel potential for heating homes and businesses are many; but job creation tops the list. Tens of thousands of jobs will be created by making the fuel locally, using cheaper fuel, and by eliminating the heating “oil tax.”

The net effect of converting 75% of homes that use heating oil to modern European style pellet boilers would be to create or sustain 79,000 jobs in Maine and almost 147,000 jobs in the three states most addicted to heating oil (based on heating oil at $4.50 per gallon).

Conclusion

We are facing a crisis in our region due to our addiction to heating oil. We saw a preview of this crisis in 2008 but, as with most addictions, pain is quickly forgotten and denial immediately takes over.

The benefits of converting a significant number of homes from heating with oil to heating with pellets are significant. The risks to our economy if we do not convert are also significant. Can we afford to sit on our hands and hope that oil prices won’t rise?

Inaction can only be a product of denial. Prices will rise.

Sidebar: Is there Enough Land?

While an important share of the non-cultivated cropland in the northern New England region produces hay that is necessary for livestock agriculture, and some of the pasture supports pasture-based beef and dairy production, as well as the equine industry, a significant part of both these land categories is used only lightly, frequently only mowed every year or two to keep it open. Assuming that 25% the non-cultivated cropland and pasture is converted to energy crops, and assuming that the average yield per acre is 4 dry tons per year, the table below shows the potential for additional feedstock (assuming 50% moisture to convert from green to dry tons).

Data is from the National Resources Inventory, managed by USDA's Natural Resource Conservation Service. Data is derived from a statistical sample of plots of land, based on observation of land cover from satellite and ground data.)

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A wood fire in your home is beautiful to behold, and there are certainly many homes out there that burn fires in their open fireplace. At NDL, we would like to educate you on the essential tools of a wood fireplace, or what we call, the fireplace tool box.

There are a few items that are essential to the safe and efficient function of a wood burning fire. But we would like to first talk about fireplace tool sets. Fireplace tools can be purchased for both decorative and utility purposes. You need well made fireplace tools in order to maintain and use your fireplace safely.

The type of tools you want in your tool set are up to you, but put some thought into how you will use them, and be sure to “roll play” with them before you buy them.

A beautiful wrought iron set may look great, but it may be too heavy for you to use. Luckily, Pilgrim makes tools sets that are both functional and beautiful. With different combination and styles, you can find a set that meets all of your needs and fits in with your home style.

The fireplace grate is another essential part of your fireplace tool box. It is designed to keep the firewood off the floor of your fireplace allowing the ashes to fall below and air to flow in. The fireplace grate is an essential factor to the burning process. By keeping the wood away from the floor, it allows the fire to draw fresh oxygen to the hottest part of the flame. This allows for more efficient wood burning.

Lastly, but certainly not the least important item in your fireplace tool box is the fireplace screen or fireplace doors. Although many people prefer burning a fire without a screen, this is not a good idea. Besides being able to catch sparks which are inevitable, the logs can become displaced as they burn down and change size. A screen or fireplace doors helps stop the disturbed logs from rolling out of the fire and into your living space. Screens and doors also make fires safer for young children and pets. However, screens and doors can be both functional and beautiful as well, and they are made to fit any style home.

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Spruce up your hearth with fireplace screens and glass doors. If you have small children or pets you may be looking for a fireplace screen for safety. Or perhaps you want a screen to protect your home from shifting logs and embers. However, fireplace screens can be decorative as well.

Are you looking for a way for your hearth to be a focal point rather than a hole in the wall? Minuteman fireplace screens are a decorative, safe and cost effective solution that will add personality and style to your fireplace.

If you have a working traditional fireplace, take a look at decorative fireplace screens. With decorative flat or three-fold screens you can turn your old fireplace into a conversation piece. Made from wrought iron, brass or brushed aluminum fireplace screens can change the entire look and effect of your fireplace in any season.

If you want to use your fireplace safely, increase the ambience of your room, and heighten the attractiveness of your hearth. Let NDL help you find the fireplace screens and doors of your choice.

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Arlington, VA – (December 21, 2010) On Friday, December 17, President Obama signed into law the $858 billion tax package that keeps current tax rates in place and extends a series of tax credits geared toward boosting the sluggish economy. Included in this package was the extension of a tax credit for biomass heating appliances that was set to expire on December 31st. The extension of the tax credit – which was never certain – is good news for the hearth industry. However, Congress did decrease the benefit to consumers that was in place from 2009-2010 under the American Recovery and Reinvestment Act and added further restrictions. The new tax credit as outlined provides:

• 10% credit for the purchase of biomass heating appliance in 2011, capped at $300
• Removal of the lower heating value level (LHV) efficiency measurement
• Credit applies to purchase price only and is not extended to installation In the weeks leading up to Congress' vote on the tax package, HPBA reached out to congressional leaders to remind them of the importance of this tax credit not only to the hearth industry but to consumers interested in purchasing biomass heating systems. HPBA has been working closely with Senator Susan Collins (R-ME) to ensure that a tax credit was contained in the bill, and we are appreciative of the efforts she put forth in achieving its inclusion. Of particular note, Sen. Collins has included language in the Congressional Record (the official transcript of the United States Congress) that directs the IRS to continue to use the lower heating value as the operative efficiency methodology in determining which appliance qualifies for the tax credit. A portion of her remarks stated:

"The IRS has issued guidance directing that the 'lower heating value' methodology should be used, which is consistent with industry practices and with our intent to ensure that the credit is available for efficient and clean-burning wood and wood-pellet stoves. Removing the reference to the 'lower heating value' from the Code serves little purpose. Certainly, however, it does not mean that this common-sense methodology is precluded, nor does it require the IRS to revisit its methodology. I hope that my comments today will help avoid confusion about the use of the 'lower heating value' methodology with respect to this tax credit." (Congressional Record, December 15, 2010; Statement by Senator Susan M. Collins; H.R. 4853, Middle Class Tax Relief Act of 2010) By extending this tax credit, Congress signals its support of the renewable fuel industry. We will continue to work with Congress to achieve recognition for the hearth industry and benefits for Americans who seek to heat with biomass fuel. Finally, we would like to thank you for responding to our call to contact your Representatives and Senators in Congress emphasizing the importance and need of a tax credit for the hearth industry.

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More and more Americans are buying vent free gas fireplaces. In fact, there are over eight million who prefer vent free gas fireplaces to any other supplemental gas-heating device. This is because of the ease and convenience provided by a vent free gas fireplace. At the touch of a button, you can be relaxing in front of a roaring fire with friends and family.

When it comes to convenience in hearth products, vent free gas fireplaces are at the top of the list. With remote controls, no venting, and thermostat controlled heating, vent free gas fireplaces are easy to use and install. These gas fireplaces are very efficient, and are mess and stress free, with no wood to cut or haul. There are many models, styles and brands to choose from. But many agree, the most excellent feature of the vent free gas fireplace here in the Northeast is the warmth they continue to provide even during a nor’easter power outage.

Vent free gas fireplaces are easy to install and have low operating costs. Because they do not need a chimney, there is no heat loss so the efficiency of the vent free gas fireplace is almost 100 percent. With winter upon us, why not choose a vent free gas fireplace

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As the days get colder and the heating bills get higher it is time to think about adding a wood burning stove to your home. With wood heat you can cut your energy bills, increase your heating efficiency and add atmosphere to your home. Wood burning stoves increase the efficiency of your existing wood fireplace, and they come in all different sizes, and styles. Do you have a modern home? No problem. There are many sleek, modern designs and colors that can add to the décor of your home. If you have a traditional colonial home, there are wood burning stoves to fit your home style as well. From Vermont Castings, to Pacific Energy, there are many styles to choose from. Let the room you gather in this winter keep you warm and provide an ambience to come home to.

With energy prices rising, why not heat your home with a renewable energy source? Wood is an eco friendly, renewable energy source, and the technology in wood burning stoves today has made them much more energy efficient than in years past. Along with the energy tax credit that is available until December 31, 2010, now is the time to buy.

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At NDL we would like you to know that along with our retailers we support our communities. With the help of our retailers, last year we provided $1600 dollars worth of toys for Toys for Tots in and around the Northeast. That is hundreds of toys!  And this year, again with the help of our retailers, we are providing hams to the local food banks in our communities. Our goal is 130 hams! The hearth shops of the Northeast will order the hams through NDL when they place their orders. 

NDL will match the amount of hams bought by the distributors. These holiday hams will then be distributed by the local food bank in your neighborhoods to families in need this holiday season. So if you are in the market for a fireplace, insert, or wood stove or any hearth accessories, let us connect you with the retailer in your area. By supporting  your local hearth retailer you are supporting you community. No one supports your neighborhood more during the holiday season than local, small businesses.

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Northeast Distribution is the leading distributor of hearth accessories and products in New England, NY, NJ, and PA. We know stocking stuffers; after all we have been specializing in winter warmth for over ten years. Keep the family warm this holiday season, and let us connect you with the finest hearth retailers in your area.

If you are looking for stocking stuffers for men, look no further. Zippo lighters, fire starters, stove fans, grill utensils, and log totes all make great gifts. Are you looking for unique stocking stuffers? We have them in beautifully handcrafted stove top steamers and kettles, wrought iron fireplace screens and firewood storage racks.

Contact us today for stocking stuffer ideas and the locations of the hearth retailer nearest you.

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Our fires are lit, and you surely remember the dry air inside your home from winters past. For the health of both your family and the wood furniture in your home, consider how you will humidify your home this winter. One of the most practical fireplace accessories on the market today is a wood stove steamer.

At NDL, we offer steamers in many shapes and sizes manufactured by Condar, Minuteman, Imperial and Last Waltz Clay Studio. These steamers come in styles that range from traditional teapots, to animal shapes, to hand-made and hand-glazed clay designs. With this many varieties and manufacturers, you are sure to find one to match your style. They are quite easy to use, just fill them with water and place it on the stove. You may also turn these steamers into aromatherapy solutions by adding potpourri, spices, or stove scents to the water. Once the steam begins to be released into your home, it not only becomes a room humidifier, but it will release the sweet smell of fragrance as well.

Wood stove steamer add decorative value to your home. Due to their unique shape and quality, just leave these decorative pieces on the wood burning stove for all to see. If you wish to add a unique touch to your home or you need extra humidity; a wood stove steamer is what you are looking for.

Of course, NDL offers a full range of fireplace accessories including fireplace glass doors, fireplace tool sets, chimney caps, and ash buckets. Let us direct you to the finest hearth dealer in your area. Contact us today.

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