The rent is too damn high and it will go higher as the owners of almost 10,000 buildings in New York City who today waste money heating with expensive No. 6 bunker fuel rush to convert to the even more expensive No. 4 or No. 2 oil in response to new city regulations prohibiting the use of No. 6 oil after 2015. If building owners converted to natural gas instead, the cost of heating their buildings would be reduced substantially, rather than increased, and the pressure to raise rents and maintenance fees would be reduced.
Unfortunately, landlords often don't care how much it costs to heat a building since they simply pass these costs to their tenants either as part of the rent or in monthly bills. The tenants, who pay the unnecessarily high heating bills, rarely have enough say in building management decisions to prevent their being saddled with the full costs of building management's wasteful decisions. Ideally, landlords would realize that lowering the percentage of tenant's money that goes to paying for heating gives the landlords opportunities to increase their profits...
Press coverage in the New York Times and other papers has focused on the fact that converting from No. 6 to No. 4 oil can usually be done for less than $10,000. What they don't mention is that No. 4 oil is more expensive than No. 6 oil... Thus, such a conversion not only costs $10,000 but also results in permanently higher heating bills. A vastly better alternative would be for buildings to convert from oil to natural gas. Although the upfront costs of conversions to natural gas are higher, they often result in fuel bill reductions of between 20% to 30% per year! For buildings that are burning thousands or gallons of fuel oil every year (only the largest buildings are burning dirty No. 6 or No. 4 oil today), a conversion from oil to natural gas will result in annual savings that range from $50,000 to 100's of thousands of dollars every year.
The savings that result from converting to natural gas are high enough so that the conversion costs are usually paid back after only one to five years. As anyone familiar with interest rates will recognize, the financial return (Internal Rate of Return) from such an investment in cheaper, cleaner fuel is much better than any reasonably safe investment in the stock or bond markets. Only a building owner who is an unaware of the excellent financial return or who simply doesn't care how much tenants pay for heating would refuse to see the wisdom in converting to natural gas instead of oil.
Of course, even if owners really don't care about the money being wasting, one would hope that they might care about the foul pollution (black smoke) that heating oil produces. These buildings aren't just wasting money, they are killing people! The particulate matter pollution (soot) produced by these 10,000 buildings (only 1% of all buildings in the city) is greater than that which is produced by all the cars and trucks in New York City combined! According to an in-depth study by researchers at NYU, burning bunker fuel for heat rather than natural gas results in over 250 additional annual deaths from respiratory disease as well over $700 million per year in health related economic expenses -- and those estimates don't include the impact of having thousands of buildings save money by using the cheaper natural gas instead of the more expensive oil.
It is clear that natural gas is not only the cheaper heating fuel in the long-term, it is also much cleaner. Unfortunately, it appears that unless community and tenant's groups work hard to encourage conversions to natural gas, many buildings are going to do what is cheapest in the short term and ignore the long-term financial and health benefits of switching away from oil. Thus, NYC's buildings will get a little bit cleaner, they will be dirtier than they have to be and they will waste even more money every year than they do today.
We'd all be better off if all 10,000 dirty buildings in New York not only quit number six oil but also converted to natural gas. If they did, then one day, the rent wouldn't be so damn high!