Cost of Heating

Any  amateur  economist knows that if two goods can substitute for each other they will, overtime, adjust their prices to about the same level.  So obviously the choice between oil or gas for heating your home shouldn’t be a matter of price.  So, being a gadfly, I found myself taking the contrarian point of view in an  argument  last fall.  At the time it was much cheaper to heat your house with gas, and it has only gotten worse.  This is, of course,  bizarre.  But as this chart shows it’s been true for years and years.

Those are US Department of Energy forecast numbers.  They are published annually, for example here are the recently released 2008 numbers.  That link is a good place to get a sense of what the numbers mean.  I drew the numbers for the other years from this page.  Even amateur economists are right some of the time.  I can’t believe that’s stable.  Maybe I should be trying to lock in my natural gas fuel price for next winter.

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