Gas closes in on $4 per gallon. Surprised? Ready?

Gas prices well above $4/gal. in California

History repeats itself with startling regularity in this country.  Case in point, energy prices.  The national average at the pump is approaching $4/gallon.  And it’s considerably higher in places like California.  Politicians of many stripes are claiming they are shocked this is happening and that something must be done.  The Obama administration is investigating fraud and abuse in the oil markets.

But the real trouble is that we have a pathetic energy non-policy in this country.  And as such, we’re at the mercy of energy price bouncing up and down on the world markets.  And bounce they do, but with a general upward trend.

Oil and gas price data from GasBuddy.com.

Politicians fiddling, or feigning shock as prices rise, won’t really protect you.  Perhaps someday the pols will recognize some basic Econ 101 principles, when demand rises and supplies don’t, prices go up.  Add some market risk and uncertainty from say unrest in the Middle East, natural disasters like hurricanes, or man-made disasters like the spill in the gulf, and they rise more.

And home energy prices in the long term do the same.  Some regulated utilities like electricity and natural gas take a bit longer to change.  Others move more or less lockstep with oil prices.  Remember just a few short years ago when heating fuel and propane soared to over $4 per gallon, and other utilities followed suit?  Are you ready for this?  Had your home energy assessment?  Made the improvements?

I’m not holding my breath that as a country we’ll figure out how to productively address energy policy.  But that doesn’t mean you are helpless.  You can make choices.  You decide what and how you drive.  You decide whether your home is an energy hog (and not as comfortable or healthy as is could be). 

Very few people, if any, can control world energy prices.  A government panel isn’t going to do it for you.  So, as energy prices rise, we can pretend we didn’t know it was coming.  And suffer the consequences.  Or we can take steps to improve our homes—and insulate our personal finances against rising energy prices.

Holy smokes, has anyone seen energy prices lately?

With the DC posturing over the budget and an Iowa man on the 31st day of his beer-only fast dominating the news, I wonder how may people has noticed what’s going on with energy prices.  Oil nosed up to $112/barrel.  And I paid $3.90 a gallon for regular yesterday.  And all this before the summer season when gas prices usually go up.  People are starting to get nervous–and rightly so–about heating their homes next winter.   I wonder if as consumers we’ll plan ahead and take action now to make the home economics work, or if we’ll put things off like Congress.

Cheers,
Mike

Prices at the pump continue to rise

Gasoline prices continue to rise.  Nationally, the average price per gallon has jumped 17.7 cents in the last month.  And it’s 42.9 cents per gallon higher than last year.

According to the AP, gasoline prices have been rising steadily with oil prices for the past month, and many analysts think that trend will continue, with gas stations across the country perhaps charging around $3.50 or more per gallon by Spring.

As the economy inches toward recovery, we can expect prices to “recover” whether we’re talking about gasoline in our cars or heating our homes.  It will to prudent to keep that in mind with decisions you make today.

Thanks,
Mike

Investing in Your Home

Wow!  The financial markets are a mess.  My 401(k) has tanked this quarter. The economy is reportedly in dire straits, and Congress hasn’t agreed on a bailout or any other action plan yet.
 
A lot of people are wondering what to do with their money. You have to go somewhere else for financial advice about your portfolio and your retirement plan.  I would like you to think about one arena, though, that still can deliver a big Return on Investment (ROI).  Home energy improvements. Even with recent declines in oil, home energy prices are still quite a bit higher than they were a year ago and forecasted to rise again this winter. Smart investing in your home can deliver returns better than the current bond market and extremely volatile stock market.
 
Here are a few examples to quickly illustrate the potential.

Let’s say you invest $2,700 in attic insulation and air-sealing.  (Remember, never think about insulation without thinking about air-sealing, too.)   And let’s assume that insulation is able to help you save $400 per year off of your gas bill based on last year’s prices.   Your first year ROI is $400 divided by $2,700 or 14.8%.  When natural gas prices rise this winter, you save more and your ROI is even higher.
 
Another example, with a simple calculation tip for your furnace.  If your present furnace is at 70% efficiency (AFUE), and you install a high-efficiency system with an AFUE of 95%, then the projected saving is 25% of the fuel you burn.  Or, said differently you save $25 per $100. If your annual fuel bill is $1,400, then your total annual savings would be about $25 x 14 = $350.  If that new furnace cost $3,850, you’ve got a 9.1% ROI—plus, you won’t be wasting money on service calls to fix your old furnace. Like the earlier example, as energy prices go up, your return goes up.  
 
Now these are just simple examples.  You might want or need a combination of several home energy improvements.  You’d need a comprehensive assessment like GreenHomes offers to determine exactly which improvements make the most sense for you and your home.  And a GreenHomes Advisor can more accurately estimate your savings.  The take away, for you, is that now more than ever, energy-reducing improvements are a smart investment that will deliver consistent returns for years to come.

Hurricane Ike Pushes Gas Prices Higher

 

More of the same:  as a result of Hurricane Ike, gas prices are up on average of $0.12 per gallon nationally.  CNN reports prices spiking above $5/gallon in some places.

 

Although the full damage probably won’t be known for a few days, oil prices are actually down slightly on expectations that the Gulf Coast refineries weren’t damaged as much as they could have been.  In fact, in a special Sunday trading session, oil has dropped below $100/barrel. 

 

Of course, $100/barrel is still 60% more than it was a year ago!  Oil prices will go up.  Oil prices will go down.  But they’ll go up more than they’ll go down.  And natural gas prices will continue to climb. 

 

Thrill seekers can ride this roller coaster.  But smart investors will change the game entirely and look for a smoother ride.  Investing in energy-efficiency in your home builds value that you can hold onto and shields you from the high risks of volatile and climbing energy prices.  If prices hold steady (or even if they drop), you the save money you otherwise be shipping out to the utility or oil company.  If prices spike, you’re protected even further.

 

If you’re the thrill seeking type, with the money you save on your energy bills, you can buy a hang glider.

 

-Mike