With energy costs always fluctuating, many homeowners are starting to explore alternatives to traditional heating oil. Propane is a popular cost and energy-efficient alternative to oil-based systems that can heat your home.
However, each fuel source has its unique advantages and disadvantages that can impact more than just your utility bills. In my line of work, I’ve witnessed firsthand how heating fuel choice affects a home’s overall condition and even its susceptibility to certain types of pests. Let’s dive into the key differences between oil and propane-based heating so you can make an informed decision about how to best heat your home.
What To Know About Propane Vs. Oil
When deciding between oil and propane heating, there are several important factors to weigh, as we’ll explain below.
Propane heating systems generally boast higher efficiency ratings than oil systems, with Annual Fuel Utilization Efficiency (AFUE) ratings reaching up to 98%. Oil heating’s efficiency is 95%. A higher AFUE means that more fuel gets converted to usable heat.
A high-efficiency propane furnace may feature improved burners and heat exchangers to maximize efficiency, lowering your heating bills compared to less-efficient oil.
Propane prices are more stable than oil since they’re less affected by fluctuations in global supply and demand. That helps homeowners buffer against price shocks, and it also lowers the cost of new propane furnaces compared to oil-based ones.
While propane costs less per British thermal unit (Btu), the overall expense of switching from oil depends on efficiency ratings and material and labor costs. Crunch the numbers for your situation, and always get multiple estimates from different contractors.
It’s easier to install a propane tank compared to an oil tank, which is often bigger and requires special permits. Propane providers handle both delivery and tank monitoring, and the tanks run out of fuel less frequently in cold climates compared to oil. That lowers the risk of a heating shutdown.
Propane is also more versatile, with options for supplemental heating appliances like fireplaces and generators. Those typically aren’t available with oil heating systems.
Propane emits less carbon and fewer greenhouse gases per Btu compared to oil, and the U.S. Environmental Protection Agency has deemed it a Clean Alternative Fuel. Oil has higher particulate and sulfur content and, therefore, more risks for emissions and air quality.
Propane is highly flammable and combustible should it leak, and so it requires particular caution around open flames. It has a strong and distinctive smell, making it easier to spot leaks early.
Oil is less flammable, but it still requires safe handling and storage, since long-term exposure to the fumes can make you sick. Leaks are harder to detect initially, and that leads to a higher environmental contamination risk.
How Much Does Propane Vs. Oil Heat Cost?
Many variables influence heating oil and propane costs.
Propane Heating Costs
If you choose a propane heating system, your fuel costs will be based on these factors:
- Efficiency: High-efficiency models maximize heat output from each gallon of propane, lowering your costs.
- House size: Larger homes require more fuel to heat. Long or cold winters also drive up propane use.
- Location: Regional supply and demand impact propane prices. Northern states tend to have higher winter demand and costs.
- Tank fees: Tank rentals or financing fees add to costs.
Oil Heating Costs
If you go for an oil heater, these factors will determine your fuel costs:
- Consumption: Old oil furnaces gobble up more fuel. Upgrading your HVAC equipment can improve efficiency and lower furnace costs.
- Crude oil prices: Global oil supply and demand cycles cause price fluctuations. Regional refining costs also make a difference.
- Delivery fees: Location factors into delivery expenses. Rural areas often pay more.
- Weather: Frigid winters increase oil consumption. Customers in cold climates use more fuel to heat their homes.
Work with multiple suppliers to compare propane and oil costs based on your household’s size, your climate, and more. Your existing equipment also plays a significant role in total expense—an HVAC professional can advise when it’s the right time to replace a furnace.
Making the Switch From Oil to Propane Heat
If your goal is to convert an oil-heated home to propane, this process involves removing the old oil tank, lines, and furnace to prepare for new equipment, often costing $3,800 to $10,000, according to Angi. Components like the system’s propane tank can change the cost, as it can go above or below ground. Underground tanks tend to be more expensive than above-ground ones. If you’re installing an above-ground tank, you’ll need to pour a new concrete pad.
High-efficiency furnaces and gas lines provide better returns. Inspections and permits can also determine cost fluctuations, as your new propane tank, lines, and equipment need to pass an inspection, which can tack on an additional cost, of up to a few hundred dollars more.
Many homeowners save 15% to 30% on heating costs by upgrading old oil heating systems to new, efficient propane equipment. Get multiple estimates to determine if converting from oil to gas makes financial sense for your home.
Pros and Cons of Home Heating Oil
While many homeowners are considering a switch to propane, oil heating remains a viable option for some.
Heating oil is a widely available fuel source in many regions, and furnaces that use it have a long 15 to 30-year lifespan. The high BTU output of oil makes for effective heating, and you can safely store oil for longer. However, oil has generally higher operating costs and emissions compared to alternative fuels, and the furnaces will require more frequent maintenance and inspections.
FAQs About Oil Vs. Propane Heating
Is it worth switching from oil to propane heat?
It can be, especially with an older, inefficient oil furnace. Upgrading to a new, efficient propane system often lowers heating costs by 15% to 30%. Get quotes on new equipment and fuel to see if propane offers savings over oil.
How much does it cost to switch from an oil to a propane furnace?
Expect to pay $3,800 to $10,000 to remove an oil tank, install a propane tank and lines, purchase a new propane furnace, and obtain permits. Have an HVAC pro assess your situation for a more detailed estimate.
Is propane or oil heat cheaper?
Propane and oil costs depend on equipment efficiency, local fuel prices, and climate. While propane can be cheaper per British thermal unit (Btu), high-efficiency systems make the most of your fuel. Do the math for your situation.
Is it worth replacing an oil furnace?
Old oil furnaces are 60% efficient at best. Upgrading to a high-efficiency model (90%-plus AFUE) can cut heating costs by 30% or more. Get quotes on new oil or propane equipment to decide.
Does propane heating cost more than natural gas?
Usually, yes, since natural gas is so abundant. But millions of rural homes without gas access use propane. Improving your home’s efficiency helps offset higher fuel costs.
What does propane have to offer?
Propane offers numerous advantages like clean burning, high efficiency, lower emissions, and excellent heating capacity. Propane systems also tend to require less maintenance than oil furnaces. With propane, there are no annual fuel deliveries needed since it’s stored on-site.
How does propane heat work?
Propane heating systems burn gaseous propane fuel to heat air or water. This heated air or water is then circulated through the home via ducts and vents or a radiant heating system. Propane is combusted efficiently to maximize the usable heat output.
