Heating Fuel Cost Comparison
Fuels are sold in therms, gallons, kilowatt-hours and cords, which makes them impossible to compare directly. This converts everything to cost per million BTU of delivered heat.
Rates and assumptions reviewed · see every source
Why cost per million BTU
Heating fuels are sold in incompatible units. Gas comes in therms, propane and oil in gallons, electricity in kilowatt-hours, wood in cords. A gallon of propane and a gallon of heating oil sound comparable and are not — oil carries 138,500 BTU, propane only 91,500. Propane can be cheaper per gallon and still cost more per unit of heat.
Cost per million BTU folds in both the energy content and how much of it your appliance actually delivers:
$/MMBTU = price per unit ÷ (BTU per unit × efficiency) × 1,000,000
Energy content of each fuel
| Fuel | BTU per unit | Typical appliance efficiency |
|---|---|---|
| Natural gas | 100,000 / therm | 80–98% AFUE |
| Propane | 91,500 / gallon | 80–95% AFUE |
| Heating oil (No. 2) | 138,500 / gallon | 80–90% AFUE |
| Electricity | 3,412 / kWh | 100% resistance, 250–400% heat pump |
| Firewood (hardwood) | 20,000,000 / cord | 60–80% stove |
| Wood pellets | 16,500,000 / ton | 70–85% stove |
Typical ranking at current US prices
| Fuel | $/MMBTU | 60 MMBTU season |
|---|---|---|
| Natural gas (95% AFUE) | $16.32 | $979 |
| Wood ($250/cord, 70%) | $17.86 | $1,071 |
| Heat pump (HSPF 9.5) | $19.30 | $1,158 |
| Propane ($2.85/gal) | $33.86 | $2,031 |
| Heating oil ($4.10/gal) | $34.83 | $2,090 |
| Electric resistance | $53.75 | $3,225 |
Propane and heating oil are effectively tied. At these prices they land within 3% of each other. Anyone telling you one is clearly cheaper is generalising from their own local prices — and local delivered price varies far more between suppliers than the two fuels differ from each other. Get quotes for both.
The gap that actually matters
The spread between the top and bottom of that table is over $2,200 a season. That is far larger than the difference between a good and a mediocre furnace within any one fuel.
Put plainly: which fuel you burn matters more than how efficient your appliance is. Upgrading an 80% propane furnace to a 95% one saves about 16%. Switching from propane to a heat pump saves closer to 46%.
If you heat with propane or oil
You are paying roughly twice what gas or heat pump users pay. Worth knowing:
- A heat pump is usually the largest single saving available to you — often $900–1,200 a season. Cold-climate models now work reliably well below freezing.
- Insulation may beat both. Cutting demand from 70 to 50 MMBTU saves as much as switching fuel, without replacing any equipment.
- Pre-buy and budget plans smooth price spikes but rarely reduce the annual total.
Where wood is misleading
Wood looks excellent per MMBTU and often is — if you have a cheap, local supply and do not value your own labour. Honest caveats: a cord is a loose measure and undersized deliveries are common; unseasoned wood delivers far less heat than the 20 million BTU assumed; a stove heats one area, not a house; and it needs loading, ash removal and annual chimney sweeping.
Estimating your own demand
If you do not know your MMBTU, work backwards from last winter's bills:
- Gas: heating therms ÷ 10 = MMBTU of fuel input
- Propane: gallons × 0.0915 = MMBTU
- Oil: gallons × 0.1385 = MMBTU
- Electric: heating kWh × 0.003412 = MMBTU
Multiply by your appliance efficiency for delivered heat. Rough guides: small well-insulated home 30–45 MMBTU, average home 50–70, large or draughty 80–120.
Related
Common questions
Is propane cheaper than electric heat?
Against electric resistance heat, yes — usually by a wide margin. Propane at $2.85/gallon through a 92% furnace delivers heat at roughly $34 per million BTU, versus about $54 for baseboard or resistance heating. Against a heat pump it is the other way round: a heat pump at COP 2.8 delivers the same heat for about $19, so propane costs nearly twice as much. If you heat with propane and have the option, a heat pump is usually the single biggest saving available.
Is propane or heating oil cheaper?
At typical current prices they are effectively tied — around $34 per million BTU each, within a few percent. Which wins depends entirely on local delivered prices, which vary far more between suppliers and regions than the fuels differ from each other. Get quotes for both rather than assuming one is cheaper. Oil carries more BTU per gallon (138,500 versus 91,500), so a lower price per gallon for propane does not mean it is cheaper per unit of heat.
Why compare in dollars per million BTU?
Because it is the only apples-to-apples measure. A gallon of propane, a therm of gas and a kilowatt-hour contain wildly different amounts of energy, and each appliance converts a different fraction of it into useful heat. Cost per million BTU folds both the energy content and the appliance efficiency into a single number you can rank.
What is a good efficiency figure for my system?
For furnaces and boilers, check the AFUE on the nameplate: modern condensing units are 90–98%, mid-efficiency 80–85%, and pre-1990 units often 60–70%. Wood stoves run 60–80%, pellet stoves 70–85%. Heat pumps are rated by HSPF; divide by 3.412 to get COP, so an HSPF 9.5 unit has a COP of about 2.8.
How much does it cost to heat a 2,000 sq ft house?
A reasonably insulated 2,000 sq ft home in a moderate US climate needs roughly 50–70 million BTU per heating season. At that demand: natural gas runs about $815–1,140, a heat pump $915–1,280, propane $1,690–2,370, heating oil $1,740–2,440, and electric resistance $2,560–3,580. A poorly insulated home in a cold climate can need double those figures, which is why insulation usually beats changing fuel.