Posted By toddm on 30 Apr 2012 05:15 PM
The predictions here are about one percent inflation a year for natural gas and propane prices through 2035. So in the kindest spin I can put on it, for docjenser to cherry pick statistics and predict double digit annual price increases when the experts say it will be far less is idiocy on his part.

Now, let me tell you what true risk is. It is adding $20k to your mortgage when your job is iffy and the real estate market sucks. Real risk is cashing in retirement accounts in an era when Ron Paul says the sick uninsured should be left to die and debate-goers applaud.

That isn't to say that geo isn't the best answer in many cases. Nor is it to say that big jumps in energy prices can't happen. But to present high inflation as certainty makes the forecaster a ____ And we'll let the reader fill in the blanks.

1) I dare to question the expert that predicts in increase of propane by 1% annually until 2035, when propane has very reliably followed oil prices in the last decade. For some reason those experts are disconnected from what happens out there in the real world.

2) I don't know why you keep exaggerating the the upfront costs of geo. Sorry you made the decision not to have one, no reason to be bitter about it. Our systems average between $20-30K including two tanks (2-6 tons), after tax credits we are looking at $2-9K more than a conventional system, not $20K.

3) I always made clear that it is a prediction, a forecast, not a certainty as you paint it now. Yes, gas prices went down to 2004 levels this year, but so did electricity prices, since much of the power is generated from natural gas. I also cite New York State, where we operate, so regional differences apply. 4) Geo not only saves on heating, but also on hot water generation and significantly on A/C. So it all adds up.

I wonder what drives you that you keep loosing your manners and misrepresent things the way you do? Especially when you don't have a system yourself. So how can you judge? Hearsay?

even at 0% price inflation on propane you can't make a case for heating with propane compared to ductless air source or geo

I agree. Avoid propane (and oil). Gasoline/diesel too if it weren't for practical issues like range, upfront cost and lack of CNG stations.

I guess I don't know how this works, docjenser. I don't own geo, never have,and don't sell'em so obviously I don't belong on this thread. But when the questionis something I know, economics, then the experts are full of sh*t. On another subject dear to me, language, predictions and forecasts call for the conditional tense -- could, should -- or qualifiers such as in my view. When you say propane prices WILL triple again in price, or that gas prices WILL inflate at double digit rates, you are expressing a certainty.

Clearing up YOUR misrepresentations is a full time job, docjenser, so I am going to assume after this post that you are busily destroying your own credibility.

As I have stated many times, geo contractors want the entire $20k to $30k upfront while the best the IRS can do is late Jan of the next year. For the poor souls who tear at Joe Ami's sensibilities, it may take 5 to 8 years to claim the tax credit. Or forever.Half of filers pay no tax or get many back via the earned income tax credit.

As a matter of fact, Joe, I'm hanging drywall today with a sub who is losing his home to foreclosure. Construction activity is his immediate problem but his mistake was refinancing his house once too often (or twice or three times.) I repeat, if your job is iffy and the real estate market sucks, refi is poking the bear. As to your other point, make the temp at night 40 degrees instead of 50 and you are describing my boyhood in Wisconsin, Joe. But my family used it up, fixed it up and made do and came out just fine in the end. As an aside, if your extra $30/month on the mortgage payment is after-tax-credit, you,too, are peddling misinformation to anyone who is not paying cash.You can pay down the mortgage when the IRS comes through, but the bank reduces the term rather than the monthly payment.

I guess I should be happy you have stopped claiming that crude is the feedstock for propane, docjenser, but, to repeat: Propane tracks crude oil prices because it can be stored and shipped, and therefore is a potential substitute for oil if prices get too high. But storage and shipment is expensive, so local markets experience less volatility than markets that already rely on shipping. I used Neb, as an example, where propane from Okla, Ark, Colo and the Dakotas, limited the decade high price to $2.05/gal in 2008. The northeast is about to have abundant local propane thanks to marcellus and utica shale development.

Finally, jonr, I also would avoid (and am avoiding) propane and heating oil in new construction. But if I were ripping out a perfectly good propane furnace, I'd plug DOE forecasts into my life cycle cost analysis rather than docjenser's, and it just could be, in a heating oriented climate, that keeping the propane for bitter cold backup and undersizing heat pump makes sense, particularly if your electric service isn't up to snuff.

Todd you continue to state things as a certainty that are not true while accusing doc of the same.
Seldom in an average home (up to 5,000SF) has geo cost a consumer 20-30k more than a propane system in my AO. My most recent estimate had the geo at about 6K more than the furnace before tax credit, which I didn't do the numbers but it is unlikely that adds even $30 a month to a mortgage.
Since you are the truth in numbers guy why don't you tell us what 6 grand more adds to a mortgage. BTW the geo will save them $1,500 yr over propane so it is well worth it and I don't care what they do with the tax credit.
You assume people I mentioned refi'ed there homes while ignoring the real facts such as thousands of professionals showing up to work at GM one day to be directed to turn in their cars and get a ride home. Few prepare for an occasion like that when working for a blue chip employer.
Is there a reason we keep hearing about "jerkwater"? Since you grew up in 40 degree weather must everybody?

I get that you are trying to offer balance but your assumptions are often misguided at best and sometimes beligerently unkind.

Real balance suggests an honest assessment of all the factors available and in my previous scenario th GM engineer that I know wishes he listened to a geo guy and not someone like you that suggested propane was a good fit.

Posted By toddm on 01 May 2012 11:17 AM
I repeat, if your job is iffy and the real estate market sucks, refi is poking the bear.

.... snip ....

You can pay down the mortgage when the IRS comes through, but the bank reduces
the term rather than the monthly payment.

Oh, so refi is bad because it reduces the monthly payment but might stretch the term.

... OTOH ...

Early paydown is bad because it reduces the term but might not reduce the monthly.

...BTW, didyaeverhearof IRS Form W-4?,

Looby

The Austrians are worse than the Germans.
The Swiss are worse than the Austrians.
The Germans are worse than the Swiss.

Really Todd, Looby nails it again. You state your only concern is truth in numbers but you routinely ignore or distort facts that don't support your claims. I think it's fair to say all the geo pros here are pro geo, yet you criticize our advocacy and worse imply disingenuousness on our part.
What's your agenda, besides promoting freezing night time temperatures in a home and insulting contributors here (sure miss the good old days)? It certainly can't be promotion of truth in a cost v benefit breakdown.

Umm,Looby,ever hear of a cash-out refinance? You know, similar to the home equity loan in that you tapped the equity in your home only to discover, post bust, that it never really existed at all? That would be the main reason why 22.8 percent of all home borrowers owe more on their houses than they are worth. http://money.cnn.com/2012/03/01/real_estate/underwater_borrowers/index.htm One way to arrive at this unhappy circumstance is to borrow $20k-$30k to install geo. (Docjenser's number,Joe, and the germane one unless you take furnaces as tradeins.)

I never said reducing the term is bad, only that Joe Ami is fudging facts if his extra-$30/mo for geo assumes that the homeowner borrowed and used tax credit to reduce the price of his purchase (because it didn't and repaying the bank won't reduce the monthly payment.) Again, if geo actually cost $6k, or you paid mostly cash, there'd be no quibbles here. But if your engineer financed the $20k-$30k, then he would care a great deal when he learned that sum put him underwater, or farther underwater. Know of anyone who would be obliged to bring cash to closing to sell his home, except he doesn't have it?

Been there done that on the W-4, Looby. Perhaps 20 percent of filers owe enough in taxes to claim a geo credit in a single year. You should get together with Joe and figure out who you are speaking for: the huddled masses or the upper middle class.

But the Gondwanalanders are the worst of all.

"For the poor souls who tear at Joe Ami's sensibilities, it may take 5 to 8 years to claim the tax credit. Or forever.Half of filers pay no tax or get many back via the earned income tax credit."

We ALWAYS advise our customers to consult their accountants right away about the tax credits so they can have their with-holdings adjusted if necessary. Also, I doubt there are many people having Geo installed that claim the earned income tax credit!!

Bergy

Did you miss this?
"My most recent estimate had the geo at about 6K more than the furnace before tax credit,"

Is it unclear? It pertains to a furnace AC and ducts for a new home at about 10K or geo about 16K: recent estimate no number fudging- again don't care about tax credit (but you bet the buyer does). Fuel savings against todays propane rates ~1,800/yr (I went back and looked it up). Can a self proclaimed economist not see the value in that.
A larger home with more expensive loop system recently had a 12K heating budget or 25K for geo. Net geo cost 13K more before tax credits. Fuel savings over propane (todays prices) $3,700/yr. Can an economist find no value in that?

Were you thinking Todd that they were going to be selecting between geo or no heat at all? Wouldn;t the price difference between the systems be the number we whould employ in an honest conversation? You are playing with numbers not me.

I also find your lack of compassion for folks in trouble offensive. If you were not hurt by the recession good for you. Lot's of college educated middleclass and upper middleclass were crushed in our state as it revolves around the auto industry. My retirement is hundreds of thousands less than 5 years ago, but I am doing better than most in my AO because I didn't build the contractor taj mahal or take money out of my house when times were good.
That doesn't make me look down my nose at those who are in trouble in spite of being responsible with their money. I am offended by anyone that won't pay what they owe if they have the means, but your insistance that everyone who is struggling brought it on themselves makes you come off as a pompus a$$.

Posted By Bergy on 01 May 2012 03:15 PM
"For the poor souls who tear at Joe Ami's sensibilities, it may take 5 to 8 years to claim the tax credit. Or forever.Half of filers pay no tax or get many back via the earned income tax credit."

We ALWAYS advise our customers to consult their accountants right away about the tax credits so they can have their with-holdings adjusted if necessary. Also, I doubt there are many people having Geo installed that claim the earned income tax credit!!

Bergy

Oh yeah thanks bergy. apparently todd is unaware of anyone having the means to buy geo actually having a 5K tax burden so that they can get the whole thing next time they file. The aforementioned folks with the 16K system sure do.....but again the numbers made sense to them with or without tax credits, which I intentionally left out of my counterpoints to Todds arguments.

It's pretty clear that GSHP systems aren't for the light-of-wallet, even with the available subsidies. (In MA the light-of-wallet can get 7-year interest free loans for high efficiency heating systems, but that hasn't exactly generated a geo drilling boom. Pellet stoves fly off the shelves when oil & propane prices are high, without subsidy.)

That's not to say that GSHP is a bad investment relative to propane-fired anything, even without subsidy, but it doesn't boost resale value on the house by much, if anything. A bathroom makeover is a better "investment" for those looking to move on in short years. For the most part, it's not going to be the median-income home buyer unable to take the tax credit quickly who is going to be buying into geo. Not that the ROI on geo is super great, rather that the $/MMBTU for propane is sky high compared to almost any other commonly used heating energy source (except resistance-electric).

Some critics view the subsidy for GSHP to be another subsidy for the already-wealthy, but what else is new? That may be one effect, but it's not the only effect. There are many reasons to support higher efficiency, but subsidies skew the thinking & marketplace, not always leading to the best public investment.

The long term value of GSHP is there, but like better-than-code R/U values, it's not going to add to the street value of the home, only to those who can afford to hang onto it are goning to reap the fullest benefit. For the short-termer or financially precarious, high efficiency ASHP with baseboard backup is a better bet as a propane-displacer- providing something like 2/3 of the benefit for (usually) less than 1/3 the upfront cost, unless the tax subsidy for GSHP is fully realizable during one's tenure, and of comparable upfront cost to propane-fired heating systems. In warmer climates than central NY it's an even better deal.

Betting that local market forces are going to drive the price of propane DOWN significantly over the next decade is quite a speculative bet (of dubious merit, IMHO). The best I'd hope for with the local sourcing is better price stability, and even that might be a stretch, given that the very proximity to the natural gas market driving the shale-gas development also puts the propane by-product similarly close to a massive market. To some degree it's the high price of propane that's propping up the development of the NY shale gas, given how gas production has temporarily outstripped the market & storage capacity, keeping a lid on the already low natural gas prices.

Posted By toddm on 01 May 2012 03:03 PM
Perhaps 20 percent of filers owe enough in taxes to claim a geo credit in a single year.

Your three-card-monty suggestion (well, one of 'em) is that the IRS
tax credit doesn't help much because it's: 1) delayed until next Jan,
and 2) doesn't affect the monthly payment, just the term.

Hint: Cash is fungible.

When my heating oil bill and IRS withholding simultaneously went
to $0.00 per month, the HELOC payments (at 2.5%, net-of-taxes)
plus electric bills left a surplus -- a/k/a instant positive cashflow.

Despite your endless pseudo-algebraic smokescreens, my choice
of whether to squander that windfall on a yacht, or invest it wisely
in Enron has absolutely no bearing on HVAC technology issues.

The case I offered Dana of the ~6K price difference, was a home for which we explored air source as well and found an additional expense of loosely $1,500 more would save them about $600/yr. Therefore the geo added 4 times as much to the price, but saved ~3 times as much. Both ate up their difference in price in about 3 years of utility savings. You are correct that tax credits artificially tilt the scales (geo would cost about same as ASHP after tax credits) but the numbers are compelling, with or without.

RE ductless, certainly less expensive to install than other 3 systems (if you only needed 1), but I remain unconvinced that it is the right product for this 3 bedroom cape cod. 2 of the highend ductless (i.e. Daiken) could swiftly pass the price of the ducted air source. Sure would be nice to have an ASHP forum to explore such things.

Posted By toddm on 01 May 2012 11:17 AM
I guess I don't know how this works, docjenser. I don't own geo, never have,and don't sell'em so obviously I don't belong on this thread. But when the questionis something I know, economics, then the experts are full of sh*t. On another subject dear to me, language, predictions and forecasts call for the conditional tense -- could, should -- or qualifiers such as in my view. When you say propane prices WILL triple again in price, or that gas prices WILL inflate at double digit rates, you are expressing a certainty.

Clearing up YOUR misrepresentations is a full time job, docjenser, so I am going to assume after this post that you are busily destroying your own credibility.

As I have stated many times, geo contractors want the entire $20k to $30k upfront while the best the IRS can do is late Jan of the next year. For the poor souls who tear at Joe Ami's sensibilities, it may take 5 to 8 years to claim the tax credit. Or forever.Half of filers pay no tax or get many back via the earned income tax credit.

As a matter of fact, Joe, I'm hanging drywall today ...But if I were ripping out a perfectly good propane furnace, I'd plug DOE forecasts into my life cycle cost analysis rather than docjenser's, and it just could be, in a heating oriented climate, that keeping the propane for bitter cold backup and undersizing heat pump makes sense, particularly if your electric service isn't up to snuff.

I suggest you keep hanging drywall, since you lack know how in geo system, and your statements not only here but also in other threads severely questions even superficial knowledge of geo system economics, and economics in general.
For the record, I cited reports that show that propane has almost tripled in the past, and expressed my prediction that chances are it will do so again, giving the fact that it has closed followed the price of oil in the past 2 decades. Nor did I say that natural gas WILL increase at double digit rates. What I did say is that the gas industry does not get a return on their investment at todays prices, thus drilling rigs have moved into oil and new gas exploration will slow down, slowing down supply until prices go up. What I did say is that we will not pay the same amount for natural gas as we pay now in the future.

I also wonder why you state that language is dear to you, and call experts here "full of sh*t" in the sentence before, claiming you are the one who knows economics.

Your suggestion to keep the propane furnace as a backup and a supplement, and undersize the geo will result in higher upfront costs, since you now have to integrate 2 systems into one distribution system. You also have to maintain the propane furnace, the propane tank, and everything associated with it. Plus your operating costs will go up further, since you will burn more propane due to an undersized geo system.
What you suggest will result in higher upfront, higher maintenance, and higher operating costs. So why are you claiming to know economics? Or geo system design?

Dunno about about three card monte, Looby. I do know snake oil when I see it. I want that geo system that costs $30/mo on a 30-year note. That puts the system cost at a tad under $6k at 4.5 percent interest. Come to think of it. I'll take two.

about another thread -
I do not know how accurate it is but another post had  " $10000 on the 30 year- is $48/month" and some apr of under 5

If we really can get a $600 savings every year and a 30% tax credit then a contract of $ 10,000 x 1.4286 = $ 14,286 might break even. (div 1 as a base by 70% left out of pocket = 1.4256)
 I do not know what other's rebates may be. And what about 8 years or even 15 years of check and clean's?

could someone put a contract and a 10 year estimate price of maintenance on this posting for all, too..?

I'll be sure to tell my clients they have todds vote as (once again) since they were already buying a furnac AC and duct system" geo only adds aabout 6k to the mortgage. Im not sure why theyd buy 2- tht suggestion would be snake oil.

Im glad to see you finally get the economy of geo Todd.

Joe and I can agree once I make the Ami calibration. (By $6k, he actually means I'd be financing $16k, and by an extra $30mo, he means my payment would be an extra $81 at 4.5 percent over 30 years.) That said, you will recall that the OP already had propane and hydronic in place in new construction. Assuming that docjenser wasn't scaring him about propane for no good reason, geo would mean financing ALL FOUR, propane and geo, radiant and forced air.

To be clear, this discussion is not about whether geo makes economic sense. Rather it is about risk, a turn docjenser introduced with his notion, disputed by the DOE, of a continued propane price explosion. My point is about real risk, with almost one in four mortgage holders owing more than their house, and it has two parts:

Increase your mortgage payment in a sucky job market = bad.

Increase mortgage principal in a sucky real estate market = bad.

Posted By toddm on 02 May 2012 09:49 AM

Increase your mortgage payment in a sucky job market = bad.

Increase mortgage principal in a sucky real estate market = bad.

You conveeeeeniently "forgot" a few:

Hedging against fossil fuel price volatility = good.

Reducing fixed annual expenses, in ANY job market = good.

Shifting payments from consumables to durable capital equipment = good.

Shifting payments from up-the-chimney propane to tax-deductible interest = good.

Forcing toddm and his geophobe/fossilphile minions to foot 30% of the bill = PRICELESS!

....there's no fuel like an old fuel,

Looby

Posted By toddm on 02 May 2012 09:49 AM
Joe and I can agree once I make the Ami calibration. (By $6k, he actually means I'd be financing $16k, and by an extra $30mo, he means my payment would be an extra $81 at 4.5 percent over 30 years.) That said, you will recall that the OP already had propane and hydronic in place in new construction. Assuming that docjenser wasn't scaring him about propane for no good reason, geo would mean financing ALL FOUR, propane and geo, radiant and forced air.

To be clear, this discussion is not about whether geo makes economic sense. Rather it is about risk, a turn docjenser introduced with his notion, disputed by the DOE, of a continued propane price explosion. My point is about real risk, with almost one in four mortgage holders owing more than their house, and it has two parts:

Increase your mortgage payment in a sucky job market = bad.

Increase mortgage principal in a sucky real estate market = bad.

Nobody except you suggesting that having geo AND propane in your house is a good idea. Everyone else was talking about geo INSTEAD of gas, oil or propane.
So you would take 1 or 2 geo systems for $6K more than a conventional system? If it saves you $ 4000 versus propane annually at todays prices, even if your mortgage goes up by $30/month? I am not sure yet, but I think you might start to understand economics.