Propane vs Heating Oil: Full Cost Comparison
Heating oil delivers more BTUs per gallon, but propane burns cleaner and furnaces are more efficient. Here is the complete comparison of cost per BTU, annual bills, maintenance, environmental impact, and conversion economics.
Propane
$2.78/gal
91,500 BTU/gallon
$3.04 per 100,000 BTU
Heating Oil
$3.45/gal
138,500 BTU/gallon
$2.49 per 100,000 BTU
Side-by-Side Comparison
| Factor | Propane | Heating Oil |
|---|---|---|
| Price per gallon | $2.78 | $3.45 |
| BTU per gallon | 91,500 | 138,500 |
| Cost per 100,000 BTU | $3.04 | $2.49 |
| Furnace efficiency | 90-98% AFUE | 80-90% AFUE |
| Effective cost per 100k BTU | $3.10 - $3.38 | $2.77 - $3.11 |
| Annual heating (2,000 sq ft) | $2,430 | $2,050 |
| Furnace lifespan | 20-25 years | 15-20 years |
| Annual maintenance | $150-250 | $300-500 |
| CO2 per million BTU | 139 lbs | 161 lbs |
| Tank cost (installed) | $1,700 - $3,300 | $1,500 - $3,000 |
| Fuel availability | National - any rural area | Mainly Northeast/Mid-Atlantic |
| Price volatility | Moderate - seasonal | High - tied to crude oil |
When to Choose Each Fuel
Choose Propane When...
- New installation: If you are building new or replacing an aging system, propane furnaces cost slightly less, last longer (20-25 vs 15-20 years), and have lower annual maintenance costs ($150-250 vs $300-500). The lifetime cost of ownership favors propane even though per-BTU fuel cost is slightly higher.
- Environmental priority: Propane produces 14% less CO2, virtually no soot, and no sulfur dioxide. If reducing your carbon footprint matters, propane is the cleaner fossil fuel choice. It is also easier to transition to a propane/heat pump hybrid system later.
- Dual-fuel flexibility: Propane pairs well with heat pumps for a dual-fuel system. The propane furnace handles extreme cold while the heat pump covers mild weather, optimizing both efficiency and comfort. Oil furnaces do not integrate as cleanly with heat pumps.
- Multiple propane uses: If you will use propane for cooking, water heating, fireplace, dryer, or generator in addition to space heating, a single fuel source simplifies delivery and can qualify for volume discounts.
Choose Heating Oil When...
- Existing oil infrastructure: If you already have an oil furnace in good condition and an above-ground tank, the conversion cost to propane ($5,000-12,000) is hard to justify on annual savings alone. Continue with oil until your current system needs replacement.
- Very cold climate: Oil delivers more BTUs per gallon, and oil furnaces can produce very high heat output. In extremely cold regions where maximum heat output matters, oil systems can be effective. However, modern high-efficiency propane furnaces have largely closed this gap.
- Cheap local oil prices: In some Northeast markets with strong competition among oil dealers, heating oil prices can be very competitive. If your local oil price is below $3.00/gal and propane is above $3.00/gal, oil has a clear cost advantage.
- Short-term ownership: If you plan to sell within 3-5 years, the conversion investment may not pay back in time. Maintain your current system and let the next owner decide on fuel choice.
Northeast Focus: Oil vs Propane
The propane vs oil debate matters most in the Northeast, where about 5.3 million homes use heating oil. Here is how the numbers work in this region specifically.
In the Northeast, propane averages $3.14/gal while heating oil runs $3.30-3.60/gal. The per-BTU comparison narrows: propane costs $3.43 per 100,000 BTU versus oil at $2.38-2.60 per 100,000 BTU. Oil still wins on raw fuel cost, but propane's higher furnace efficiency (95% vs 85% typical for an aging oil furnace) cuts the effective difference significantly.
Many Northeast homeowners are switching to propane as their oil furnaces reach end-of-life. The conversion typically happens during a furnace replacement, which reduces the incremental cost since you would be buying a new furnace regardless. At that point, the decision comes down to: do you want a cleaner-burning fuel with lower maintenance that pairs well with a future heat pump, or do you want to stick with oil for the modest per-BTU cost advantage?
The trend in the Northeast is clearly toward propane and heat pumps. Oil furnace installations have declined 30% since 2015 while propane installations have grown. Several Northeast states offer incentives for converting from oil to propane or heat pumps. Massachusetts, Connecticut, and Maine all have programs that can offset $1,000-3,000 of conversion costs.
Oil to Propane Conversion Costs
The full cost breakdown for switching from heating oil to propane.
| Item | Cost Range |
|---|---|
| Oil tank removal (above ground) | $500 - $1,000 |
| Oil tank removal (underground) | $1,500 - $3,500 |
| Propane tank (500 gal, installed) | $1,700 - $3,300 |
| Propane furnace (installed) | $3,000 - $6,000 |
| Gas line piping | $300 - $800 |
| Permits and inspection | $200 - $500 |
| Total | $5,000 - $12,000+ |
Frequently Asked Questions
Is it cheaper to heat with propane or heating oil?
Heating oil is slightly cheaper per BTU in most markets. Propane costs $3.04 per 100,000 BTU versus heating oil at $2.49 per 100,000 BTU. However, propane furnaces achieve higher efficiency ratings (90-98% AFUE) compared to oil furnaces (80-90% AFUE), which narrows the real-world cost gap. In the Northeast where both fuels are common, the annual heating cost difference for a 2,000 sq ft home is typically $200-500 in favor of oil. Propane's lower maintenance costs and longer equipment lifespan partially offset the fuel cost disadvantage.
How much does it cost to switch from oil to propane?
Switching from heating oil to propane costs $5,000 to $12,000 total. This includes oil tank removal ($500-2,500 depending on above/underground), a new propane tank installed ($1,700-3,300 for 500 gallon), a new propane furnace or boiler ($3,000-6,000 installed), and permits ($200-500). If the oil tank is underground, removal costs can be much higher due to soil testing and potential remediation. Many homeowners switch to propane for the cleaner fuel, lower maintenance, and dual-fuel flexibility with heat pumps.
Is propane cleaner than heating oil?
Yes, propane burns significantly cleaner than heating oil. Propane produces about 139 pounds of CO2 per million BTU compared to 161 pounds for heating oil, a 14% reduction. Propane combustion produces virtually no soot, sulfur dioxide, or particulate matter, while oil burners generate all three. Propane furnaces require less maintenance because the clean burn does not leave residue in the heat exchanger. Propane is also classified as a clean fuel under the Clean Air Act, while heating oil is not.
Which lasts longer in a tank, propane or heating oil?
Heating oil provides more BTUs per gallon (138,500) than propane (91,500), so a gallon of oil lasts roughly 50% longer in terms of heating output. However, propane furnaces are more efficient, so the real-world difference is smaller. A 275-gallon oil tank provides comparable heating to about 400-450 gallons of propane. Propane has the advantage of not degrading over time - it can be stored indefinitely. Heating oil can develop sludge and microbial growth over time if not treated, especially in rarely-used tanks.
Should I switch from oil to propane in the Northeast?
The decision depends on your specific situation. Switching makes sense if your oil furnace is old and needs replacement anyway (the incremental cost of switching fuels is lower), if your oil tank is underground and needs removal regardless, if you want cleaner-burning fuel with less maintenance, or if you plan to add a heat pump and want propane as a backup fuel. Switching may not be worth it if your oil system is relatively new, your heating costs are already manageable, or if the $5,000-12,000 conversion cost cannot be justified by the modest annual savings.