3.0 Fossil Fuels 3.1 Natural Gas (See Notes 1, 6, 7, 8, 9) Natural gas is primarily used for electric generation, residential and commercial heating, cooking, water heating, and industrial process heat. Its use as a motor vehicle fuel is small but increasing. It is also the energy source for most commercial fuel cells. Its non-energy use as a feedstock for chemical manufacturing is not significant in the New England region. Virtually all new fossil fuel power plants in the region are natural gas-fired. Consumption increased in 2007, probably due to fuel switching from petroleum products, whose prices increased dramatically relative to natural gas. While natural gas prices did approach historic peaks seen in 2005, they recently fell along with other fuel prices. There are many opportunities for natural gas efficiency programs, including residential and commercial heating, industrial processes, and combined heat and power systems. Electric efficiency programs indirectly reduce natural gas consumption through decreased generation. Figure 3.1: Annual Natural Gas Consumption Figure 3.2: Monthly Massachusetts and U.S. Natural Gas Prices Figure 3.3: Annual Natural Gas Costs - 14 -
Figure 3.4: Monthly Natural Gas Consumption Figure 3.5: YTD Natural Gas Consumption Figure 3.6: Monthly Natural Gas Costs Figure 3.7: Regional Wholesale and Retail Natural Gas Costs - 15 -
3.2 Propane (See Notes 2, 3, 4, 9) Propane is typically used in the same applications as natural gas where natural gas is not available. In New England propane is also used by natural gas utilities to supplement their supply when peak natural gas pipeline capacity is more expensive than propane. Regional propane consumption has increased dramatically in recent years. This may be due to fuel switching from heating oil and increased use by natural gas utilities for blending during winter peak periods. Propane prices have increased dramatically in recent years, as have other petroleum products. Retail markup of propane is higher than markups of other petroleum fuels. Possible causes are: lack of price competition between the small number of dealers; volume-based pricing that penalizes low volume customers; and combined tank rental and fuel contracts that result in non-competitive fuel pricing. There are currently minimal propane-specific efficiency programs in the Northeast. The opportunities for propane efficiency are similar to those for natural gas. Figure 3.8: Annual Propane Consumption Figure 3.9: Monthly Propane Prices Figure 3.10: Annual Propane Costs - 16 -
Figure 3.11: Monthly Propane Consumption Figure 3.12: YTD Propane Consumption Figure 3.13: Monthly Propane Costs Figure 3.14: Regional Wholesale and Retail Propane Costs - 17 -
3.3 Jet Fuel (See Notes 2, 3, 4, 9, 11) Jet fuel is used almost exclusively for air travel and its consumption reflects the status of that industry. As with other petroleum products, the price of jet fuel has increased dramatically in recent years and fallen in recent months. Since the majority of jet fuel purchased in a particular state is typically consumed flying beyond state lines, disagreements exist over the best way to assign aviation CO2 emissions. Opportunities for efficiency include modernizing commercial fleets, using fewer flights with larger aircraft (which use less fuel on a per-passenger basis), and switching to high-speed rail for shorter flights. Figure 3.15: Annual Jet Fuel Consumption Figure 3.16: Monthly Jet Fuel Prices Figure 3.17: Annual Jet Fuel Costs - 18 -
Figure 3.18: Monthly Jet Fuel Consumption Figure 3.19: YTD Jet Fuel Consumption Figure 3.20: Monthly Jet Fuel Costs Figure 3.21: Regional Wholesale and Retail Jet Fuel Costs - 19 -
3.4 Gasoline (See Notes 2, 3, 4, 9) Gasoline is used almost exclusively for transportation. Costs have increased dramatically in recent years due to rising world prices. Consumption in the region decreased in the first half of 2008, but the recent price drops may reverse this trend. The response to higher gasoline prices has both a short- and longterm component. In the short-term drivers reduce discretionary automobile trips and switch to public transportation where possible. In the long-term high gas prices affect automobile purchases and living-working location choices. Switching to fuels with lower carbon content could decrease CO 2 emissions without changing vehicles or driving habits. State mandates for increased vehicle efficiency depend on overturning the recent EPA rejection of California s right to establish a state efficiency standard. Development patterns, largely influenced by local zoning and land use regulations, have a substantial impact on the amount of driving done by an area s residents. Figure 3.22: Annual Gasoline Consumption Figure 3.23: Monthly Gasoline Prices Figure 3.24: Annual Gasoline Costs - 20 -
Figure 3.25: Monthly Gasoline Consumption Figure 3.26: YTD Gasoline Consumption Figure 3.27: Monthly Gasoline Costs Figure 3.28: Regional Wholesale and Retail Gasoline Costs - 21 -