Home › Heating fuel cost comparison
Heating Fuel Cost Comparison
Fuels are sold in gallons, therms, kilowatt-hours, tons and cords, so their prices can't be compared directly. This calculator converts each one to the cost of a million Btu of heat actually delivered into your house, using your prices and equipment efficiencies.
The formula
The U.S. Energy Information Administration recommends comparing fuels by price per unit of heat content. We take one step further and divide by the efficiency of the equipment, so the result is the cost of heat that actually reaches your rooms:
The break-even price column answers "how cheap would this fuel have to be to match what I pay now?" With the default prices and efficiencies, oil at $3.48 gives a propane break-even of about $2.49: propane would need to cost less than that per gallon to save money.
About the default prices and efficiencies
The oil, propane, natural gas and electricity prices are EIA's average forecasts for the 2025–26 winter (U.S. average for heating oil; Northeast averages for the others, with gas converted from $16.02 per thousand cubic feet at 10.36 therms per Mcf). Prices vary a lot by state and change every week, so replace them with your own: your last delivery ticket or utility bill has them. Pellet, firewood and kerosene prices aren't tracked nationally by EIA, so those defaults are only examples.
The efficiencies are reasonable starting points, not facts about your home:
- Oil 85%: oil hot-water boilers made since 2021 must be at least 86% AFUE under federal rules; older systems often run in the high 70s or low 80s.
- Propane and natural gas 92%: high-efficiency condensing furnaces are rated 90–98%; older non-condensing units are around 80%.
- Heat pump COP 2.5: COP means heat delivered per unit of electricity. A U.S. Department of Energy field study of cold-climate heat pumps found typical COPs between 1.6 and 2.7 in weather below 30°F, higher in mild weather. 2.5 is a reasonable seasonal figure for a modern cold-climate unit in the Northeast; use 3 or more in milder climates.
- Pellets 75% and firewood 68%: EPA puts pellet stoves at 70–83% and certified wood stoves at about 68% on average.
What this comparison leaves out
Cost per Btu is the right first test, but it isn't the whole decision. Switching fuels means equipment and installation costs, and possibly a new chimney liner, tank removal or electrical upgrade. Wood and pellets take labor and storage space. Heat pumps also provide air conditioning. Oil and propane have delivery minimums and price swings, while gas and electricity carry monthly fixed charges that don't change with usage. For a full oil-to-heat-pump analysis including installation cost and payback, use the heat pump vs oil calculator. To size a wood or pellet supply, see the pellet and firewood calculators.
Frequently asked questions
What is the cheapest way to heat a house?
Where it's available, natural gas is usually cheapest per unit of heat. Next, depending on local prices, come heat pumps, firewood you cut or buy cheaply, and wood pellets. Electric baseboard heat is usually the most expensive. Enter your own prices: the ranking changes from one region and season to the next.
Is propane cheaper than heating oil?
Per gallon propane is usually cheaper, but a gallon of propane holds only about two thirds of the heat of a gallon of oil (91,452 vs 138,500 Btu). At the EIA's 2025–26 Northeast winter prices ($3.26 for propane, $3.48 for oil), oil works out cheaper per Btu of heat even after allowing for a more efficient propane furnace.
What does cost per million Btu mean?
It is the cost of one million Btu of heat actually delivered into your home, after your heating system's losses. It puts fuels sold in gallons, therms, kilowatt-hours, tons and cords on the same footing. One million Btu is roughly the heat an average oil-heated home uses in three January days.
How much electricity equals a gallon of heating oil?
A gallon of heating oil holds 138,500 Btu, the same as about 40.6 kWh of electricity. In an 85% efficient boiler it delivers about 117,700 Btu, which a heat pump with a seasonal COP of 2.5 delivers using about 13.8 kWh.
How do I find my heating system's efficiency?
For furnaces and boilers, look for the AFUE rating on the yellow EnergyGuide label or in the manual. New oil hot-water boilers must be at least 86% AFUE; older systems can be in the 70s. For heat pumps, divide the HSPF rating by 3.412 for a rough seasonal COP.
Sources
- EIA, How do I compare the cost of heating fuels? (cost per million Btu formula) and Energy units and calculators (Btu content of oil, propane, gas, electricity, wood).
- EIA, Winter Fuels Outlook 2025–26: winter average prices used as defaults.
- EIA, Monthly Energy Review, Appendix A: kerosene 135,000 Btu per gallon.
- Oregon State University Extension, Home Heating Fuels: pellets 16.5 million Btu per ton.
- U.S. DOE, 10 CFR 430.32(e)(2) (oil-fired hot-water boilers made since January 15, 2021: at least 86% AFUE); DOE, Cold Climate Heat Pump Challenge field validation (COP below 30°F).
- U.S. EPA, Pellet stoves and AP-42 §1.10 (stove efficiencies).
Last reviewed October 25, 2026. Estimates only; see the disclaimer.