LEWISTON — Riots in Egypt and cold weather in Maine may not seem like they have much in common.
But Maine's energy pioneers say the recent turmoil in the Middle East makes it more apparent than ever the state must move quickly to break its addiction to home heating oil.
Maine, with 75 percent of its homes heated with oil, is more dependent on oil for heat than any other state and any big disruption in the global supply chain will translate to big bucks for Maine families.
For much of the last decade John Kerry, the state's top energy planner, has been sounding the alarm and lamenting the annual export of $3 billion to $5 billion a year from the state's economy that's spent on fossil fuels, including heating oil, gasoline and diesel.
"This robs people of Maine of jobs," Kerry said. "It robs us of purchasing power and it impoverishes about 25 to 30 percent of the people in the state of Maine in many ways."
But even as Mainers button up their homes and technology improves the efficiency of furnaces and motors, the price of oil and gas — driven largely by a burgeoning global demand — isn't going to go down soon, if ever, said Kerry, director of the state's office of Energy Independence and Security.
Steep climbs in costs, not incomes
Over the past dozen years, the per-gallon cost of heating oil has jumped by more than 300 percent, and the cost of gasoline, one of the primary fuels for transportation, has gone up more than 200 percent.
Meanwhile, the median family income in Maine has increased only 27 percent.
The burden of the state's fossil-fuel dependence affects impoverished and low-income families the most, Kerry said.
"Many people don't realize it, but for people who are in the lower incomes, this has been a problem since the 1950s and 1960s, never mind the 1970s and 1980s," Kerry said. "Many people in Maine are put in dire straits, choosing between heating and eating. . . . I know that's a fact, and now that's moving up and starting to hit the middle class."
Without a vibrant plan to diversify Maine's energy sources, some, including former Gov. Angus King, believe the state could become largely "uninhabitable for eight months of the year," especially if oil reaches the $5- to $6-a-gallon range and we've done little to convert our primary heat sources to something other than oil.
"We would become a one-season Bahamas," King, a wind-power developer, said at a recent Sun Journal editorial board meeting.
Kerry said he didn't completely agree with King's message but believes it should be heeded.
"He has strenuously made the point to the potential extreme example," Kerry said.
But as recently as 2008, Mainers did see $5-a-gallon diesel prices and more than $4-a-gallon heating oil prices.
"People should not be unaware that this could happen again," Kerry said. The Energy Information Agency, an arm of the U.S. Department of Energy, is projecting crude oil prices will reach more than $100 a barrel within the next five to 10 years. And with that, the price of refined petroleum products like home heating oil will go higher.
"It would not be a stretch to see prices in the high fours in the next few years," Kerry said. "God willing, with energy efficiency, conservation and prudent consumer practices, we might be able to avoid it."
But even with conservation and efficiency measures, Kerry said growing demand from places like China and India will push petroleum prices upward.
"I think people should be very much aware that it takes several years for all of this to take place outside of some geopolitical circumstance," Kerry said.
For example, a natural disaster or political unrest in an oil-producing country or a country critical to the global oil supply could have a big impact on Maine's energy prices, especially at the height of the heating season.
What happens 'there' can hurt 'here'
That's why people like Sam Zaitlin, president of Thermal Energy Storage of Maine, are pushing for lower "off-peak" rates for electricity in Maine.
After the current crisis developed in Egypt, a country that moves about 3 million barrels a day through its Suez Canal, the per-barrel price of oil jumped by $6 in three days.
That price shift wasn't triggered by an actual supply disruption, but more by general market concerns over instability in the Middle East. It illustrates the direct connection Mainers have to unstable governments far away, Zaitlin said.
"With something like this, you think you've got it all figured out, and then someone goes and topples a regime," Zaitlin said
Zaitlin, president of a fledgling company hoping to distribute an electric heating system that depends on energy stored as heat in dense, ceramic bricks, has a vested interest in the price of oil.
Zaitlin and other energy entrepreneurs, including King and those in Maine's emerging wood fuels industry, say their passion is less about making a buck and more about breaking the state's dependence on foreign crude.
Europeans use multiple sources
"The whole picture is quite precarious and that's been reasonably well understood for quite some time," said Harry "Dutch" Dresser.
Dresser, director of Maine Energy Systems, a Bethel-based company that sells and installs home wood-pellet boiler systems and delivers wood pellets in bulk, says most Americans are in denial about energy problems.
"If you were to talk to most astute Europeans, they would understand the situation very clearly and they would be making adjustments to their own situation in anticipation to the problem," Dresser said. "We in this country haven't done that. We are pretty comfortable with what we've been doing and we have a bit of an ostrich posture on some of this, I'm afraid."
Dresser said he sees any price spikes resulting from new turmoil in the Middle East as more of a distraction from the underlying problem.
"The price increases we've been watching have been going on right along through the fall and into the winter when there was nothing extraordinary happening in the Middle East," Dresser said. "I'm a little worried that people are going to think we are having oil stresses because the Middle East is in the middle of deconstructing, without ever recognizing that oil prices were heading that way, anyway."
Dresser is not confident Mainers will ever get electricity cheap enough to heat their homes — in fact, expensive electricity is a big obstacle for wood-pellet mills, he said.
Frogs in a pot
But Dresser, Zaitlin, Kerry and others agree that in the future many homes likely will have more than one source of heat available.
"If you take a look at Europe, the Europeans are quite apt to have multiple heating systems in their homes now so they can burn whatever is cheap now. It's very common practice," Dresser said. "And I don't suppose it happened on purpose. I suppose it happened as they adapted to changing fuel supplies and just left the old stuff intact. "
Zaitlin likens the shift toward more diversified heating sources to frogs in a pot of water that is gradually being heated.
"People will do a whole range of things (as the price of oil increases)," Zaitlin said. "And as that water temperature rises, more and more people will hop out of that pot."
Other energy experts, including those in the oil industry in Maine, say that while they recognize the state's current dependence on oil can be a problem, they do not expect any sudden or apocalyptic scenarios for the state.
Dick Hill, a retired professor of mechanical engineering at the University of Maine in Orono, has studied energy issues for many years. He mostly heats his student apartment buildings with wood, including a large Russian furnace. Hill also uses heat pumps to supplement the hot water for his buildings.
Hill, 92, said he believes before we see any mass conversions from oil to alternative primary heating sources, we will have to undergo a cultural conversion of sorts. Compared to other parts of the world, Americans enjoy much more space per person in their homes, he said.
"We are way off scale," Hill said. "There's way, way more residential space per person than any other place in the world."
Higher heating oil prices will mean kids will move back in with their parents, Hill said. "We will see all kinds of social adjustments, not just energy adjustments, to compensate."
The oil dealers' response
Jamie Pye, president of the Maine Energy Marketers Association (formerly the Maine Oil Dealers Association), said some of those predicting doomsday scenarios have a vested interest at stake.
They also tend to ignore advances being made on oil-burner efficiency and conservation, while long-term price forecasts are notoriously unreliable, Pye said.
"It's a worldwide commodity and there are a lot of factors that influence a commodity price at the moment, and that has always been the case," Pye said. "So anybody prognosticating where oil prices are going to be — that's a best guess."
Pye said his members recognize the market will determine prices and that is one reason many have started to broker in different kinds of heating fuels, including pellets and propane. He said what he fears is the heavy hand of government intervention trying to pick the right commodity and botching the job.
"There are a lot of people out there claiming doomsday," Pye said. "You have the peak oil guys, you have the guys who say the Middle East is going to blow up, and so on." (Pye's "peak oil guys" believe we have reached maximum petroleum extraction globally and are now in a terminal decline.)
All legitimate concerns, Pye said. "But whether you can put some faith in that or not and whether or not you want government in some way to put its thumb on the scale and choose which product will succeed or not succeed is a very dangerous proposition — to move away from the market base. Price will certainly push people to other fuels or to be more efficient."
Indeed, over the past five years, the state's annual consumption of heating oil has gone down by about 100 million gallons, Pye said.
That reduction has come from a combination of things, he said: people using new forms of supplemental heat, such as pellets and electricity; better weatherization; and new and more efficient oil furnaces. The newest furnace technology can cut annual oil consumption by 35 to 40 percent.
Some have converted to different primary heating sources. The most recent U.S. Census Bureau data shows that about 72 percent of Maine homes use oil as their primary heating fuel. That's down from about 80 percent five years ago.
Pye said people use oil in Maine because it's safe, efficient, clean burning and dependable. The convenience of oil is difficult to beat, it's available statewide and accessible to most people, he said.
To the hand wringing over the amount of money Mainers export to the petroleum market, Pye said you can pick virtually any commodity that's necessary for life in Maine and make the same argument. Whether it's food, clothing, electronics or vehicles, many items we need for daily life are not made in Maine.
Even Maine's electricity distribution and supply system is largely owned by out-of-state and foreign interests, Pye said.
"So, where's all that money going?" Pye said. "So, all the electricity money is going out of state. Money goes out of state for almost everything we consume here in Maine."
That doesn't mean Maine should not be involved in the production side of the energy market, Pye said, but he urged people to keep some perspective in heating-fuel discussions.
Diverging fuels market
Pye, like Kerry and others, agree that the mix of heating fuels and energy sources in Maine is going to grow more diverse in the years ahead.
Kerry said the state has an emergency plan for helping people cope with a short-term spike in oil prices, including community warming shelters, if need be. But the state still needs a long-term plan to ensure energy independence, he said.
Growing global demand alone will push fuel oil and gasoline to $5 per gallon within the next decade, Kerry predicted, and for each $1 jump in the per-gallon price of oil, add $1 billion per year to the amount of money being exported from Maine's economy.
Meanwhile, developments on the world stage will continue to directly affect how much Mainers pay for heat and transportation.
Kerry also warned that many of the countries with governments in transition do not usually have a favorable view of the United States, and many of those countries control their oil supplies through nationalized companies.
"I think it's going to be a gradual evolution, but people have to understand that the marketplace has changed — I hate to use the word forever — but at least the marketplace is changing where oil and petroleum products are not going to go back to $10 a barrel. . . . We will probably never see that again," Kerry said.
"There will have to be alternatives, and we are going to have to seek out different forms of fuels to heat our homes and businesses and to fuel our cars and trucks and other transportation mechanisms," he said.