The availability and price of energy is a huge concern for homeowners and businesses in our area. The first line of defense against price spikes or shortages is conservation and efficiency. If you need less, then you are less at risk. Geothermal heat pumps run at an average efficiency of 400%. This means 75% of the heat they provide is pulled from the ground. It is not subject to price fluctuations, and it will always be there.
The next area of concern is the differences between fuels in terms of price, source and regulation. Geo systems run on electricity. Electricity is produced in many ways. Coal and oil fired plants are being retired and natural gas generation is on the rise. We still have nuclear plants. We get a considerable amount of power from hydro, both local and from Canada. Renewable sources such as solar PV and wind are also on the rise. They are also sourced locally and from out west. Power from renewable and nuclear sources has a much more stable price profile than fossil fuel based sources. We are relying more on natural gas and it can be volatile. There is currently a glut and prices are depressed. For now anyway, the natural gas market price is set domestically and worldwide demand has very little do with pricing. That may change. Fuel oil is the energy source that is most affected by global supply, demand and market pricing. Events in the Middle East as well as increased demand from China, India or the developing world can cause wild swings in the price of crude oil. Industrial missteps such as the BP oil spill in the gulf or the Exxon Valdez accident also can disrupt the market for crude oil, and these price swings are felt by the consumer directly.
Sidebar: (I always get a kick out of the infomercials touting “American energy resources”. They make it sound like Americans collectively own the energy. I can just imagine a trusted (and paid for) voice, like James Earl Jones or Senator Fred Thompson, saying “Come my fellow Americans and we will harvest God’s bounty. Roll up your sleeves and together we will provide for our children and our children’s children”. Absolute bunk! The oil that washed up on gulf beaches wasn’t yours or mine. It was BP’s. Do they sound American? How about Royal Dutch Shell drilling in the Alaskan arctic? Just because something is here doesn’t make it ours. It also seems that no matter how much oil they find, it’s always the $100/barrel kind. They never seem to find the cheap stuff. As for natural gas, China and Europe are paying three to four times our domestic price, and as soon as facilities to liquefy natural gas are up and running, you can bet lots of that ‘American’ gas is heading overseas. The windfall profits will end up in very few pockets. Prices will equalize, but it is safe to assume our price will go up much farther than theirs goes down. Don’t fall for the industry fairy tales delivered by the info babe wearing a corporate power pant suit who seems like Gwyneth Paltrow playing T. Boone Pickens. Drill here, drill now! Really? If we want to do something for our children’s children, we’ll leave it down there)
The other stabilizer for the price of electricity is state regulation. Since the power companies are regulated monopolies, rate structures require approval from state regulators. There are some market forces, mostly with the generation charges, that enable the consumer to shop on price, but those also are subject to state oversight. Power from fixed cost, domestic sources combined with regulation results in considerable stability in the price of electricity.
For the ultimate in security and price stability, a geo system can be mated with a renewable source like solar PV or wind. It is not feasible to have your own oil well but we have many customers who have both geo and solar. The economics work out great, but many customers absolutely revel in the independence that such a system affords.