Economics should be open

May 21, 2009

Heavy variation in heating fuel — implications for electricity use analysis

Filed under: Uncategorized — howardchong @ 6:55 pm

As researchers, we try hard to be rigorous, but one of the biases we are most susceptible to is that our local world is representative of and similar to the rest of the world. This is untrue, except given homogeneity. If there is any variation, then at least somebody is “abnormal”.

Hence, I was surprised to learn that CA is not normal in terms of heating fuel use and that this non-normality is pretty significant. CA is extremely natural gas intensive, with the most credible reports (consider CA RASS 2004) saying that ~70-90% of homes heated by natural gas. Using a national data set, we can see the variation. In 1997 (RECS), 68% of households in CA used natural gas heating. Oregon and Washington, cooler climates with more heating load, had 20% of households using natural gas, and 62% heating with electricity. Part of this may be due to  the lower prices for electricity in the Pacific Northwest.

What does this mean? It means that I shouldn’t be comparing CA to OR and WA because it’s an apples to oranges comparison. I also shouldn’t be doing difference in difference analyses because whatever treatment we can think of will be polluted by these other state-specific factors.

Here’s the data.

http://spreadsheets.google.com/pub?key=rvzb12aYy2k4th_wr2EHc9w

Notice the tremendous variation in fuel source. New England and the Mid-Atlantic use a lot of heating oil. Electricity is king in the South (East South Central and South Atlantic) but also huge in the Pacfic Northwest. Natural Gas is high in other places.

Panel data on this also exists; I just haven’t processed it. It’s in each year’s RECS microdata set.

This post is related to my criticism of the claim that energy efficiency is driving the CA vs USA wedge. See for one part of the discussion:  https://opensourceeconomics.wordpress.com/2009/02/25/rosenfeld-where-art-thou-rosenfeld/

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