If your Seattle home uses heating oil, you’re going to be paying more; here’s why

Seattle Mayor Jenny Durkan signed into law Monday a new tax on the sale of home heating oil, saying the action will combat climate change by encouraging residents to move quicker to clean heating systems.

The tax of 24 cents per gallon will be collected starting Sept. 1, 2020, and the city expects it to raise $1.6 million in 2021.

As many as 18,000 Seattle households still use oil heat, according to the Durkan administration, though that number has been dwindling. Heating oil costs about $3 per gallon, according to one local company.

The mayor proposed the tax last month and the City Council voted unanimously to pass it last week, adding a provision that exempts non-petroleum based portions of biodiesel blends.

Durkan linked the measure to the recent Global Climate Strike demonstrations, saying the action will serve “our climate, our economy” and the next generation.

“We’re in a fight for our climate and we’ve got to be tackling every source,” she said Monday. “We know our greenhouse gas emissions come mostly from transportation and buildings, so we’ve got to tackle those.”

Home heating oil in 2016 accounted for an estimated 63,000 metric tons of Seattle’s greenhouse gas emissions, or about 2% of total emissions and 13% of residential building emissions, according to the Durkan administration.

Cars and light trucks accounted for about 1.7 million metric tons of emissions in 2016, or about 53% of the city’s total emissions.

Even without a tax in place, emissions from home heating oil have declined sharply in recent years, down from 109,000 metric tons in 2008.

Debbie Millard, president of Ballard Oil, said the city should have consulted providers like hers about the tax. Many residents who still use heating oil are older people with modest incomes, she said.

Partly because Ballard Oil also sells oil to fishing vessels, the company should be able to deal with the tax without too much pain, she said.

“I’m more concerned about our (residential) customers,” Millard said. “They’re going to be getting charged more just to keep themselves warm.”

Those residents were considered in drawing up the tax, Durkan said.

The new revenue will be spent on grants and rebates to help residents move to electric heat, on worker training and other support to help oil providers learn alternative systems, on reimbursements for low-income households, and on outreach and administration.

Converting to an electric heat-pump system now typically costs $10,000 to $15,000, according to a council memo.

The city expects about 3,000 households to receive grants and rebates, including about 1,000 low-income households that will have their conversions entirely covered.

Some low-income households that the city expects to have trouble paying the heating oil tax may be reimbursed up to $120 per year.

“We’re going to make sure the tax actually benefits those people who can’t afford to move over to non-carbon energy,” the mayor said.

In addition to the tax, Seattle’s new law says the city will come with a plan to ensure that all heating-oil tanks are decommissioned or upgraded by the end of 2028.

Most tanks in the city are more than 60 years old, and leaks can lead to soil and water pollution. Some people who stop using oil move to natural gas and some to electric heat.

For a typical household with a 500-gallon tank, heating oil costs $1,700 per year and electric heat would cost $850 less, according to the city. Not all households with oil spend that much, Millard said.

Four percent of Seattle households with registered oil tanks are enrolled in the city’s utility discount program for low-income residents, according to the Durkan administration.

Councilmember Mike O’Brien earlier this month proposed the city ban natural gas hookups from new buildings. That legislation has been delayed due to concerns raised by some businesses and unions.

Durkan thinks more research should be done, she said, noting a gas ban could make low-income housing more expensive to build.

Clarification: This story has been updated to clarify that Seattle’s new law says the city will come up with a plan to ensure that all heating-oil tanks are decommissioned or upgraded by the end of 2028. An earlier version of the story said the law would require that tanks be decommissioned or upgraded.