How to compare home heating costs
Heating fuels are sold in different units — natural gas by the thousand cubic feet (Mcf) or therm, heating oil and propane by the gallon, electricity by the kilowatt-hour — so their prices cannot be compared directly. This page converts each one into the cost of one million Btu of heat actually delivered into the home, allowing for both the energy in the fuel and how efficiently a typical furnace, boiler or heat pump turns it into warmth.
Why natural gas usually wins
Where a home is connected to the gas network, gas is almost always the cheapest fuel to burn. Heating oil and propane contain more energy per gallon but cost two to three times as much per unit of heat, which is why homes without gas service — much of New England and the rural U.S. — pay the highest heating bills.
Heat pumps change the arithmetic
Electric baseboard heat turns each kilowatt-hour into its 3,412 Btu of heat and no more, making it the costliest option in most states. A heat pump instead moves heat from outdoors, delivering two to three times as much heat as the electricity it uses. That efficiency makes it the cheapest option in states with low power prices, and competitive with gas in many others. In severe cold its efficiency falls, which the estimator’s COP setting lets you allow for.
What drives prices
Residential natural gas prices follow wholesale gas at Henry Hub with a lag, plus the fixed cost of the local distribution network. Heating oil tracks diesel and crude oil. Propane is tied to natural gas liquids and to inventories going into winter, and it can spike in a cold snap when regional supplies run short.
Frequently asked questions
What is the cheapest way to heat a home?
It depends on the state. Measured as the cost of one million Btu of heat delivered into the home, natural gas is the cheapest option in most states. Where electricity is inexpensive — much of the South and the Pacific Northwest — a heat pump is often cheaper still. Heating oil and propane usually cost two to three times as much as gas per unit of heat, and electric resistance heat is the most expensive.
How is the cost per million Btu calculated?
The residential price of each fuel is divided by the heat it delivers: its energy content multiplied by a typical appliance efficiency. We use 1.036 million Btu per thousand cubic feet of natural gas at 90% furnace efficiency, 138,500 Btu per gallon of heating oil at 85%, 91,500 Btu per gallon of propane at 90%, and 3,412 Btu per kilowatt-hour for electricity — at 100% for resistance heat and a seasonal efficiency (COP) of 2.5 for a heat pump.
Why are summer natural gas prices so high?
Residential gas bills include fixed monthly charges. In summer, households use very little gas, so those charges are spread over a small volume and the average price per thousand cubic feet rises sharply. That is why this page compares fuels over the heating season, October through March, when most gas is used.
How often are heating oil and propane prices updated?
The EIA surveys residential heating oil and propane prices weekly, on Mondays, during the heating season from October through March. Outside the season no weekly prices are collected, so the latest figures are from the end of March.
Is a heat pump cheaper than a gas furnace?
In states where electricity is cheap relative to natural gas, yes. A heat pump moves heat rather than making it, delivering two to three units of heat per unit of electricity. In very cold weather its efficiency falls, and in states with expensive electricity a gas furnace remains cheaper to run. The estimator on this page lets you change the heat pump's efficiency.