Energy Alerts, April 22, 2015

Whether you’re a homeowner, a renter or a business owner, and regardless of the energy source you rely on for heating, cooling and lighting, there is one simple way to save on your energy bill: Use less energy. To help you do so, this issue of Kiplinger’s Energy Alerts (issues are free through June 9) outlines ways to shave your utility costs, from making quick and easy changes to investing more substantially in energy efficiency.

Small Steps to Save $$

In our digital age, home and office electronics gobble more and more of the electricity we use — even when our devices are off. The American Council for an Energy-Efficient Economy (ACEEE), which encourages energy-saving practices and advocates for tighter efficiency standards, reckons that the electronics in an average American home draw about 50 watts of power when turned off or left in standby. That doesn’t sound like much, but it adds up to 440 kilowatt-hours per year. Since the average electric rate paid by households in America was 12.5¢ per kilowatt-hour last year, that works out to $55 per year in wasted energy.

Luckily, it’s easy to keep some of that money in your pocket. Unplug appliances and devices you rarely use — say the TV in the guest bedroom that’s rarely watched. And plug items you do use frequently into power strips that can be turned off by flipping a single switch. If you have a home office with a laptop, a printer and computer speakers, for instance, keeping them truly “off” when not in use saves about 9 watts of power.

Don’t overlook easy steps to save a bit on heating and air-conditioning, too. Remember to change the filter on your furnace, AC or heat pump. The system has to work harder to circulate air through a dirty filter, thus wasting energy.

Consider dialing down the temperature setting on your water heater. An easy way to check: If your hot water tap runs more than 120 degrees on a kitchen meat thermometer, your heater is probably set too high, says ACEEE research analyst Rachel Cluett. Also, use the “low” or “vacation” setting when you’re away for several days. (No sense heating water you won’t be using, right?) And if you have an older water heater with fiberglass insulation instead of more-modern foam, pick up a water heater insulating blanket from the hardware store.

Thinking Bigger

To trim your energy costs further, you’ll likely need to invest more time and money.

Take lighting, for example. The federal Energy Information Administration estimates that lighting accounts for 15% of the electricity consumed by both homes and businesses. More-efficient lighting products hold big potential savings. Both compact fluorescent bulbs and light-emitting diodes use far less energy per unit of light output than do traditional incandescent or halogen bulbs.

But are the up-front costs worth the long-term energy savings? A CFL bulb that mimics the light output and shape of a 60-watt incandescent can cost a few dollars. An equivalent LED can easily run $10 or more.

To earn back that investment quickest, install high-efficiency bulbs in the fixtures you use the most. (And bear in mind that CFL bulbs generally aren’t dimmable, so they won’t be suitable for every fixture.) To gauge the time required to break even on your up-front expense and start saving on your electric bill, use a calculator such as this one. You can input the prices of two different types of lightbulb (say a traditional incandescent versus an LED), how many hours the bulb will work every day, and how much you pay for electricity.

For instance, swapping a 60-watt incandescent bulb for a nine-watt LED that costs $10 and runs four hours a day, at an electric rate of 12¢ per kilowatt-hour, will break even in about 13 months and then save the user $9 per year. (It helps that LEDs generally last much longer than traditional bulbs.) Multiply that by a dozen or more bulbs, and the annual savings start to look sizable.

When It’s Good to Get Audited

For a more general approach to saving on your energy bills, consider calling in a pro to perform a whole-house energy audit. ACEEE’s Cluett, who used to perform these inspections for homeowners in Maryland and Virginia, says the idea is to identify where your home is losing heated or cooled air – letting you target insulation and air sealing to the places that need it most.

To find a qualified auditor, check with your state energy office or your utility. One or the other should be able to recommend experienced auditors in your local area and can also tell you about any incentive programs from your utility that might pay for some or all of the inspection. Cluett says a typical home audit costs roughly $400, but rebates from the utility could trim that significantly.

Insulating and air sealing a home aren’t cheap. But the payback can be substantial, assuming you plan to live in the home long enough to reap the benefits. The U.S. Department of Energy says that proper insulation and air sealing yields a 15% saving on the average home’s heating and cooling bills.

Businesses with large facilities can expect to pay much more for a customized energy audit. But note that many utilities will pay for part or all of the expense if the firm adopts the energy-saving recommendations generated by the audit.

Cooling Your Summer AC Bills

If you live in a region with hot summers – or hot weather year-round – your air conditioner probably adds a hefty amount to your electric bills. ACEEE estimates that cooling accounts for 17% of residential energy bills (second only to heating, at 26%). So helping your current AC run more efficiently, or upgrading to a new unit, has the potential to save you some real money.

Wes Davis, vice president of quality assured programs at the Air Conditioning Contractors of America, says there are a few things consumers can do to make sure their systems are running at peak efficiency. Aside from replacing dirty air filters regularly, he recommends gently washing the aluminum fan blades in the outside compressor unit with a garden hose to remove debris so the fan can move air as efficiently as possible.

Need to replace your air-conditioning unit because it’s on the fritz, or nearing the end of its useful life (roughly 20 years)? Ease the hit to your wallet by springing for a highly efficient new unit that will lower your future electric bills. Davis says that the best ACs available today are about 60% more efficient than the units commonly installed two decades ago. He recommends models with variable speed motors, which let the system throttle back when less than full cooling is needed.

But whatever type of air conditioner you buy, the key to maximizing its efficiency is proper installation. Davis says most brands on the market today are reliable – what matters is selecting a system that is the right size for your home and making sure that the ducting is well insulated and sealed. So seek out a good contractor to do the job (interview a few of them, and use this ACCA checklist to ask them the right questions). “This isn’t like buying a refrigerator at the big-box store,” Davis says. Getting the installation right is essential to keeping you cool, and to saving you money.

Energy Alerts, April 8, 2015

Welcome to Kiplinger’s Energy Alerts — a digital heads-up on coming trends and breaking developments in the energy industry. The alerts are free through June 9. In this issue, we zero in on what’s shaping up as a momentous year for the U.S. oil market: Oil prices are down, U.S. crude production is up, and many Americans are ditching fuel sipping compact cars for pickup trucks and SUVs like it’s 1999, boosting gasoline demand. And we’re only in April. Here’s how I see the remainder of the year for U.S. and global oil markets plus my read of oil supply-and-demand trends over the longer term.

Outlook for the Rest of 2015

Supply

Oil production in the U.S. figures to remain robust, despite a small dip this spring or summer as oil firms drill fewer new wells in response to the big drop in crude prices. At more than 9 million barrels per day, crude output is nearing its all-time high, set in 1970. Factor in the 5 million barrels of biofuels, propane, butane and other liquid hydrocarbons the U.S. churns out each day, and daily petroleum output jumps to almost 15 million barrels — about three-quarters of total demand.

The U.S. will continue to be the number three producer of crude, after Russia and Saudi Arabia.

Imports

Given the surge in production, it’s no wonder U.S. dependence on imported oil and refined fuels is plummeting. Imports from the Organization of Petroleum Exporting Countries (OPEC), the international oil producers cartel, are down more than half since 2008. Nigeria, long a key supplier to the U.S. market, now sends virtually no crude at all to American shores.

Odds are that net imports of foreign petroleum — meaning total imports minus oil or refined products that the U.S. exports — will approach zero by the end of this decade. Plenty of oil and fuel will still flow in and out of the U.S. market, but dependence on foreign suppliers to make up the shortfall in domestic production will fade away.

Exports

Meanwhile, exports of U.S.-refined fuel will keep surging as American refiners take advantage of abundant crude and excess refining capacity to ship gasoline, diesel, propane and other products abroad. Bill Day, spokesman for Texas-based refining giant Valero, says the firm recently exported about 10% of its gasoline production and roughly a quarter of its diesel output. Most of those sales go to Mexico and other Latin American buyers, an “increasingly important” market, he says.

Strong foreign demand for refined fuel is especially good for U.S. refiners because of the long-standing ban on exporting most American crude oil. Sales of refined products face no such limit, so American refineries can buy U.S. crude at a discount to foreign benchmarks but still sell their refined products at regular market rates. Plus, as Valero’s Day notes, U.S. refineries use cheap American natural gas to power their plants — a big cost advantage compared with foreign rivals.

But note that exports of U.S. crude oil are quietly on the rise. Sales to Canada are generally exempt from the export ban, and Uncle Sam has also OK’d exports of condensate, a very light form of crude recently deemed eligible for export if it undergoes some simple chemical processing. Exports of condensate hit 80,000 barrels per day in January, up sharply from last year. At least one exporter, Enterprise Products Partners, aims to significantly ramp up its condensate exports this year. The company is seeing growing demand from Asian buyers.

Demand

Even as other countries buy more U.S.-made fuels, Americans are filling gasoline tanks more often, too. After trending down in the wake of the Great Recession, total U.S. petroleum demand is on the rise again. An economy generating more jobs spells more drivers who need to fuel up, and the recent tumble in gasoline prices is encouraging folks to drive more for pleasure as well. This summer figures to be the busiest travel season since before the recession, and gasoline sales could potentially exceed the peak set in August 2007, when drivers purchased more than 400 million gallons every day.

Looking Beyond 2015

Don’t expect this year’s big jump in fuel consumption to become the new normal. What we’re currently seeing is an unusual combination of faster economic growth and relatively cheap gasoline, which is spurring demand.

In the longer term, oil consumption is likely to resume the gradual decline that began in 2007, when total U.S. oil usage peaked at about 22 million barrels per day. Two big factors explain why.

First, Uncle Sam is determined to see the country burn less fuel over time. The government’s latest fuel economy rules require manufacturers to ramp up the mileage of their new vehicles, with a target of 54.5 miles per gallon for 2025 models. John O’Dell, green cars editor for Edmunds.com, says that the 54.5 mpg figure reflects a complicated formula the government uses for figuring fleetwide fuel economy and that future vehicles will have to average about 40 mpg in real-world mileage tests to meet the 2025 goal. Still, that’s nearly double the average fuel economy of today’s new cars, he says.

So look for automakers to invest in a slew of fuel saving technologies: Thriftier gas engines; hybrid cars that can run on battery power for short distances; fuel cells that combine hydrogen and oxygen to generate electricity; and electric cars that plug into the electric grid. Edmunds’s O’Dell reckons that all these approaches are needed to keep up with ever-tightening mileage regulations.

Moreover, even as automakers race to save gas, younger Americans are turning away from driving altogether. The American Public Transportation Association reports that 2014 saw the highest ridership on subways, buses and other public transportation in 58 years. Transit officials in cities attracting millennial residents, such as Austin, Texas, and Denver, are seeing especially heavy growth in transit usage. Automakers hope to eventually win over these carless young consumers with tech-heavy small cars that fit better into urban landscapes. But they face an uphill battle to alter what looks like a generational shift away from car ownership.

Tech Alerts, April 1, 2015

Welcome to our second free trial issue of Kiplinger’s Tech Alerts, a digital heads-up on trends and breaking developments in the technology industry. Tech Alerts will come to you by e-mail every other week. This week’s issue focuses on how the sky’s the limit for business uses of commercial satellites. We’ll also take a look at the Apple Watch and other wearable tech as well as ways to share the airwaves and more.

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