The 1960s: The Battle Of The Heating Fuels
Electric vs. gas, electric vs. oil, oil vs. gas — the utility companies offered incentive after incentive to try to mold markets. Rates were favorable for all-electric homes; studies were performed that showed the benefits of gas systems in certain climates. Electric utilities tried to use heat pumps to drive the all-electric market, but their cost effectiveness was limited in northern climates.
Some of the early marketing claims walked the precarious tightrope of safety issues.
Marketing, SafetyA series of News editorials written by George Taubeneck in September of 1962 took a critical look at “The Battle of the Fuels”:
“During a News study of one facet of the growing competition between gas and electricity interests a few years ago, we were asked by representatives of both groups to determine ‘How many people are killed each year, in their homes, by electricity and by gas?’
“At the time, the National Safety Council did not classify fires according to gas or electric causes, but it was able to supply data indicating that, in the previous year, about 250 persons had been electrocuted and about 500 had been asphyxiated by gas in their homes.
“When The News relayed this information to one gas company executive, he countered, ‘That’s not a fair comparison. How many of those gas asphyxiations were suicides?’
“This was funny, but only half funny, because it was at that time that insiders in both camps alerted The News to their intentions to inject the ‘safety angle’ into their promotional efforts.
“It was at this time that electric people began calling theirs the ‘flameless fuel.’ Gas people began calling attention to power failures during storms and, not so openly, to fires caused by ‘improper wiring.’”
What drove this competitiveness in the heating arena? Taube-neck explained that “Whoever got the heating load in a residence stood the best chance of getting the hot water, cooking, and incidental loads. Each utility interest would like to see the whole house go gas or electric.”
Healthy competition is one thing, he continued. However, making safety claims against competitors that came dangerously close to scare tactics wasn’t the best mode of competition.
On the other hand, “The subsidizing of gas air conditioning or heat pumps by interested utilities, while objectionable to some, seems to us a valid merchandising technique in getting a concept off the ground,” he wrote. “Whether utilities should merchandise in direct or hidden competition with established distribution channels is another question, even in those states where utilities are permitted to sell.”
Gas ConversionsAlthough electricity had a head start in the market, gas heating installations were quickly gaining ground. A 1962 case study examined “two elementary public schools dating back to Civil War days [that] have had their ancient coal-burning heating systems converted to enclosed, individual room gas-fired heaters at an installed cost of less than $1,000 per classroom.
“Baltimore Public School 118, age 104, and P.S. 126, age 94, are now using gas heating units made by Norman Products Co., giving each classroom 85,000-Btuh input.”
The units were approved by the American Gas Association (AGA), with the “modern” convenience of being assembled and internally wired at the factory. The installed cost was $13,525 for P.S. 126 and $12,171 for P.S. 118.
The new systems were designed to blend in with, not interfere with, the classroom.
That same year, Taubeneck reported that “AGA’s Chet Stack-pole anticipates nearly 1,200,000 homes throughout the nation will adopt gas heating this winter,” at the AGA meeting in Atlantic City, NJ. This was expected to bring the number of homes kept warm by gas up to 23.6 million.
The states expected to add the greatest number of residential gas heating customers included Illinois, Indiana, Michigan, Ohio, and Wisconsin. Second were states along the Pacific coast. Third was the Middle Atlantic — New Jersey, New York, and Pennsylvania. “This region is expected to add 150,000 house heating customers in 1962, bringing the total to 2,828,000,” Taubeneck wrote.
Newly built homes were expected to account for 83,000 of the installations, with conversions constituting the remainder. “New Jersey will add 40,000 gas house heating customers, New York 67,000, and Pennsylvania, 43,000.”
Gas utilities inched into the market on a region-by-region basis throughout the decade. In 1965, the United Gas Improve-ment (UGI) Co. in Philadelphia, PA, featured “Gilt-Edge” guarantees of heating satisfaction and costs. The promotion was expected to add more than 4,000 conversion and new home customers to the eastern Pennsylvania utility.
The campaign’s major emphasis was on a “Money-Back Guarantee of Heating Satisfac-tion” for customers that converted to gas heating from competitive fuels. If, after one year, customers were not satisfied that gas heat was better, the company said it would refund all payments made and replace the old equipment at no cost.
Contractor participation in the program was supported with promotion kits. Cash bonuses were paid for each heating installation and each customer signed to the company’s financing plan.
Electricity Strikes BackMeanwhile, the electric utilities were not sitting idly by.
In 1962, George M. Hanning reported in The News that “Armed with a new reduced ‘all electric’ rate, Toledo Edison Co. recently began actively promoting electric heating in its northwestern Ohio service area.
“With all advertising media trumpeting the advantages of electric heating, and urging the public to ‘Ask Toledo Edison’ about it, the utility has already been swamped with inquiries, according to William Poole, vice president of marketing.”
The rate offered residential users of electric space and water heating about a 15% saving over the basic rate. The first 500 kWh were priced at $10, the next 500 kWh at 1.7 cents/kWh, the next 500 at 1.6 cents/kWh, and anything over 1,500 kWh at 1.5 cents.
Now, part of the competitive puzzle in Ohio stemmed from local codes that restricted many electrical installations, including furnaces, to electrical contractors. However, Toledo Edison residential sales manager Robert Porter noted that while electrical contractors showed the most interest in the program, the utility was “very much interested in operating with the warm air people.”
The electric home promotions would continue throughout the decade. In 1965, for example, the Edison Electric Institute (EEI) announced that nearly half of its $3.5 million 1966 advertising program would concentrate on electric home heating.
The overall program involved 66 full-color consumer advertisements to appear in Life, Look, Reader’s Digest, Better Homes & Gardens, and American Home, stated EEI. Twenty-nine of the advertisements were devoted to electric heat.
The ads were expected to reach 75% of all U.S. households and 90% of all families with incomes over $5,000.
The industry was gradually learning to “accentuate the positive” by emphasizing comfort, “wonderful feeling,” and system options offered by electric heat, rather than knocking the safety of the competition.
Then in 1967, a New Jersey utility decided to simultaneously promote electric heating and gas air conditioning. Why? “Because we have a decided summer peak on our power lines,” was the composite answer from several spokesmen for Public Service Electric & Gas Co. in Newark.
“Our electrical boys are happy to see us plugging gas cooling,” said J.E. Griffith, air conditioning engineer.
George Keil, retired owner of Keil Heating and Air Condition-ing, Riverdale, NJ, said that electric utility actions were being carefully watched by “oil jobbers,” as his company once had been. “We installed oil-fired warm-air furnaces for around $700,” he said, “with an underground tank.” Hydronic baseboard systems were installed for around $1,200. His company offered 24-hr service for oil-heat systems. It was almost a given that customers’ systems would break down on Christmas Eve in the dead of night.
Keil said he and others belonged to fuel dealers’ associations, such as the Fuel Merchants Association of New Jersey, which was one of many groups active in “keeping curbs on utilities,” he said.
In 1967, a complaint filed by Herbert A. Watkins, president of the Mechanical Contractors Assoc-iation of New Jersey, along with the Fuel Merchants Association of New Jersey and others, contended that a wiring allowance of $31,050 and the donation of electric kitchen equipment worth approximately $7,500 used to persuade the Hammonton School Board to install electric heating in a new high school, violated the provisions of N.J.S.A.. 48:3-2 and 48:3-4.
However, the New Jersey Board of Public Utility Commissioners ruled that residential electric heat promotion practices of Atlantic City Electric Co. are “neither arbitrarily, unlawfully, unreasonably, or unjustly discriminatory nor unduly preferential.”
Fuel Oil, Hydronics, And ‘Battle Kits’Hydronic and fuel oil interests both maintained high profiles in the heating market.
In 1962, the national Better Heating-Cooling Council’s Commercial & Industrial Division (New York, NY) released a “Battle Kit” — an outline of how to market hydronics against electric resistance competition. At the same time, a five-point plan of action was proposed to boost sales of hydronic heating and cooling equipment.
The kit included information on the nature of the competitive threat, how to proceed against it, the use of sales and promotional tools, and the preparation of cost analyses.
In 1965, Newark, NJ contractors came up with their own Battle Kit of information to counter claims for electric resistance heating and boost sales of hydronics. It was issued by the Mechanical Contracting Industry Council of New Jersey and was sent to mechanical contractors and United Association locals throughout the state.
The kit contained a pocket-sized rate card, “which enables the user to compute quickly and accurately how much more ERH [electric resistance heating] costs per Btu than gas or oil.” Also included were pieces outlining the advantages of hydronic heating in schools and apartments, with detailed case studies showing cost comparisons of the two systems.
In 1969, “Operation Cleveland” was the hydronic industry’s $135,000 program of consumer advertising and promotion in northeastern Ohio, announced the national Better Heating-Cooling Council. The campaign used billboards, TV commercials, and newspaper ads extensively over a 14-week period “to expand hydronic sales with a new, comprehensive approach to the consumer.”
The activity wasn’t limited to the East Coast. In St. Paul, MN, in 1965, the oil industry made a public exhibit of a total energy system at the Minnesota State Fair. Northwestern Refining Co., St. Paul Park, was the exhibit’s sponsor. The exhibit’s dominant theme was “Oil Total Energy.” Local and national manufacturers provided equipment for the display.
The promotions seemed to be paying off, at least in some areas. By 1965, the National Oil Fuel Institute (NOFI, New York) reported the “reversal in several areas of the downward trend in oil heating sales.”
The institute said it would again spend $725,000 in national advertising in a 1966 program that would include promotional tie-ins with builders. Local advertising was likewise expected to continue at the previous year’s total, some $3.5 million.
In 1967, the National Oil Jobbers Council raised more than $25,000 from its state organizations to fight utility subsidies, according to Ed P. Godwin Jr., chairman of the council’s utility subsidies subcommittee.
This money was earmarked primarily for planning and preparation of testimony given before the subcommittee of the House Small Business Committee.
Legislative ActionIn 1967, The News reported that the U.S. Justice Deptartment made “a preliminary inquiry to gather relevant facts on electric utility promotion practices in competition with the oil heat industry in a number of parts of the country.”
Specific concerns included:
That same year, “A comprehensive questionnaire designed to reveal the amount, source, and precise uses of utility promotion funds was mailed to a large number of the nation’s energy suppliers last week in preparation for hearings next month before the Subcom-mittee on Regulatory and Enforce-ment Agencies of the House Small Business Committee,” reported Gordon Duffy for The News.
Rep. John Dingell (D-MI), chairman of the subcommittee, made the announcement at the 85th national convention of the National Association of Plumbing-Heating-Cooling Contractors in Cleveland, OH. He invited all those with evidence they felt might be helpful to send it to him.
Questionnaires also were sent to “a large number of representative natural gas and electric utilities, together with the 20 to 25 largest producers of fuel oil.” They also went to trade associations such as the EEI, AGA, NOFI, and similar groups.
The hearings were sparked by NAPHCC’s complaint before the Federal Trade Commission and by other small business groups, notably oil jobbers, home builders, wholesalers of heating and cooling equipment, bottled gas distribution, and appliance retailers.
While he declined to prejudge the situation, Dingell added that “It is quite clear that small businessmen are being injured by some of the practices which are prevalent today.”
Gas Pulls AheadFor whatever reason — utility and industry promotions, consumer preference, technological and/or economic restrictions — by the late 1960s, gas heating had a leg up over electric and oil heating.
Gas utilities promoted their systems throughout the year, summer and winter. In fact, a direct-mail “Summer Sweepstakes Promotion” conducted by the Gas Improvement Co. was reportedly responsible for 140 heating installations in eastern Pennsylvania — and heating sales were still coming in.
The promotion turned up 44,000 leads, of which 9,300 were heating prospects. “Just on heating leads alone, we have enough to keep our men busy for months,” said William W. Weill, advertising and sales promotion manager. The sweepstakes offered customers an opportunity to win one of 166 gas prizes, including air conditioners and furnaces.
William A. Belt, consulting engineer of Belt & Given, explained in 1967 that the decision of whether or not to specify electric heat can vary according to design needs: “We have designed many electric heating systems. There have been conditions where we have felt it can be of good use.
“When you have a large heat loss per square foot, you can’t consider electric heat. But if the heat loss per square foot is way down, and the air conditioning load is up, you can consider electricity for heating and air conditioning.”
In July of 1967, it was reported that in New York City, “Approximately four out of five — or 623,000 — single-family homes built in 1966 use gas for heating, according to the AGA.”
Sidebar: Teen Beat On HeatEven the opinion of teenage girls seemed to carry some weight in the battle of the fuels. In 1965, Seventeen magazine surveyed U.S. teenage girls on the type of heating fuel they would prefer for their future homes:
Publication date: 11/12/2001