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Propane vs Oil Heat: Which Is Best For Home Heating?

If you have a choice between fuels, the answer frequently comes down to money. Which is the cheapest fuel to heat with?

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In most of the US, the question of what to heat a home with barely needs to be asked. Natural gas is the natural choice in most urban areas. It’s available at the street. Gas furnaces and boilers require little maintenance.

Propane vs. Heating Oil

Most of what you need to do to stay warm is remember to pay the gas bill. In rural areas, natural gas’s cousin, propane, is the king of fuels. Delivered by truck to above- or below-ground storage tanks, propane-fueled appliances are also low maintenance.

But then, there’s the Northeast. There, fuel oil, also known as home heating oil, is also a popular choice. Similar to diesel fuel, home heating oil is delivered by trucks and pumped into a storage tank usually located in the basement.

In the past, underground oil tanks were common, but because of the contamination caused by leaky tanks, it’s difficult to get a mortgage for a house with an underground tank.

Which is Cheaper, Propane or Oil?

If you have a choice between fuels, the answer frequently comes down to money. What is the cheapest fuel to heat with?

Comparing cost isn’t straightforward

Both oil and propane are sold by the gallon, while natural gas is sold by the cubic foot.

To make sense of fuel pricing, you need to know two things. First, prices vary regionally, so check with local suppliers to verify local rates. Second, you need a consistent basis for comparison. The easiest one is Btus per unit, a measure of the heat from burning the fuels.

Home heating costs

Product Cost per unit Cost per 100,000 Btu
Product Cost per unit Cost per 100,000 Btu
Home heating oil: 137,381 Btu/gallon $2.12 $1.54
Propane: 91,452 Btu/gallon $1.77 $1.61
Natural gas: 1,037,000 Btu/thousand cubic feet $10.51 $1.01

*Prices as of October 2020

Natural gas is the clear winner on cost, if you have it available. If it’s not available on your street though, you’ll need to choose between propane and fuel oil.

Other Factors to Consider When Choosing Propane or Oil

It’s harder to get fuel oil to burn than natural gas or propane. Gas flows into the combustion chamber under its own pressure.

Maintenance

Achieving the proper air-fuel mixture to burn very cleanly is accomplished with no moving parts, so very little maintenance is needed. (Most gas burners will work with either natural gas or propane with a change to the pressure regulator and the orifices at the burner.)

Oil, on the other hand, must be pumped to the oil burner, and the burner is relatively sensitive to wear and buildup of soot and carbon. Consequently, oil burners are more expensive initially and require more regular maintenance.

Appliances

If you’re building a new home, the fuel choice isn’t just about heat, either. You can have a gas stove or a gas clothes dryer, but not oil-fired versions of those appliances. Most people with oil heat choose electric stoves and dryers, but you could also install gas for them.

Water Heaters

Water heaters are another consideration. Gas water heaters are relatively cheap and low maintenance. Oil-fired water heaters cost more, but usually produce hot water faster. Whether gas or oil, if you heat with hot water rather than forced air, then the same boiler that heats your home can also heat the domestic hot water, saving the cost of a separate heater.

Fuel Choice and Climate Change

Another consideration is the amount of CO2 emitted into the atmosphere by the fuel you burn. Of the three fuels discussed here, oil is by far the worst, at 161.4 lbs. of CO2 per million Btus produced. Propane is considerably better, creating 139.05 lbs. of CO2 per million Btus. Natural gas is best, at 117 lbs. of CO2 per million Btus.

Based on that, as well as cost, natural gas is the easy choice, right? Well, not so fast. Gas carries its own environmental consequences. Like oil, it’s a fossil fuel with potential environmental damage from the drilling process. Plus, methane (the largest component of natural gas) is 84 times more potent a greenhouse gas than carbon dioxide. Methane leaks from well heads, pipelines, and processing are relatively common, and to some degree offset gas’s lower carbon emission compared to oil.

That doesn’t mean gas isn’t a more environmentally friendly option that oil—it just means the choice is a little more nuanced, and something to be considered along with cost and convenience.