Oil, propane, gas, or heat pump: what's cheapest to run?
Cost per million BTU of delivered heat, at your prices, not a statewide average. Every number below is a starting point — your delivery slip or utility bill beats it, so change anything.
| Fuel | $ / MMBtu delivered | $ / year | At these inputs |
|---|
Prices are EIA national residential averages: heating oil and propane are the final weekly readings of the 2025–26 season (March 30, 2026); natural gas is the derived heating-season band ($1.35–$1.57/therm, default shown is the midpoint); electricity is the April 2026 national average with regional overrides from the same EIA table. Source: research/installed-costs.md §12.
Assumptions behind the math
Energy content per unit (EIA/DOE physical constants — not yet a row in our research file; flagged for the curator to add): heating oil ≈138,500 BTU/gallon, propane ≈91,452 BTU/gallon, natural gas 100,000 BTU/therm (the definition of a therm), electricity 3,412 BTU/kWh. Typical AFUE assumptions, also not yet in the research corpus: an older oil boiler runs 75–85%, a new condensing gas furnace runs 90–95% (EIA/DOE typical bands) — propane furnace efficiency is assumed similar to gas (80–90%) as a standard planning estimate, since no dedicated propane AFUE band was found this sweep. Heat pump seasonal COP bands (2.2–2.6 standard climate, 2.0–2.4 cold climate) are derived from HSPF2 data in research/installed-costs.md §12. Adjust any of these to match your own equipment's nameplate rating.
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How to read cost per million BTU
A gallon of oil, a therm of gas, and a kilowatt-hour of electricity each hold a different amount of raw energy, and your equipment turns that raw energy into usable heat at a different rate. Cost per million BTU (MMBtu) delivered puts all four fuels on one scale.
Worked example, at the prefilled prices: natural gas at $1.46/therm contains 10 therms per million BTU, so before efficiency loss that's $14.60. Run it through a 92% AFUE furnace and you get $14.60 ÷ 0.92 ≈ $15.87 per MMBtu delivered. Do the same for a heat pump: 18.83¢/kWh converts to roughly 293 kWh per MMBtu, divided by a seasonal COP of 2.4, lands at roughly $23 per MMBtu delivered. Same method, every fuel — that's what the calculator above automates with your own numbers.
Figures cited to research/installed-costs.md §12 (EIA fuel prices, HSPF2-derived COP bands).
Who wins, honestly
At current EIA national averages, oil and propane are the clearest losses. Gas versus heat pump is the real contest, and it turns on your electricity rate.
At national-average prices, heating oil (roughly $50/MMBtu at 80% AFUE) and propane (roughly $34/MMBtu at 85% AFUE) both cost meaningfully more per unit of delivered heat than either gas or a heat pump. Neither one is close.
Gas versus heat pump is where it gets interesting. At the national-average electricity rate, an efficient gas furnace (roughly $16-$20/MMBtu) still edges out a heat pump (roughly $21-$28/MMBtu) — but that gap moves a lot with your local rate. EIA's regional data (§12) puts New England electricity at 29.49¢/kWh, which pushes the heat pump's cost well above gas. Drop to the Mountain West's 14.92¢/kWh and the heat pump can pull even with, or ahead of, gas. There is no single national answer here, only your rates.
No hype either way: gas can and does win this comparison in plenty of real households. The calculator above tells you which side of that line your actual prices fall on. For the fuller qualitative picture beyond fuel cost alone, see heat pump vs furnace and the operating cost deep dive.
Prices move — here's the pattern
Annual averages, including the ones prefilled above, flatten out swings that matter to your actual bill.
Propane spikes hard in cold snaps, and the regional spread is wide: the prior season's readings put East Coast propane around $3.60/gallon against roughly $2.21/gallon in the Midwest (§12) — a swing of more than 60% around the same national figure this page defaults to. Heating oil's national average is heavily Northeast-weighted, since that's where most oil heat actually lives, which means a "national" oil price is really closer to a regional one.
EIA's own weekly heating oil and propane survey pauses off-season and doesn't resume until October, so the figures on this page are the freshest available heating-season readings, not a live feed. Trust your own delivery slip or utility bill over any average here, including ours — that's exactly why every field above is editable.
The switch has a capital cost too
Everything above is operating cost. Switching fuels also means paying for equipment, and that number matters as much as the fuel bill.
A whole-home ducted heat pump typically runs roughly $14,000 to $25,000 installed, before rebates — marketplace quote data (EnergySage) averages around $14,500, while modeled whole-home estimates (Rewiring America) put the median meaningfully higher depending on home size; both are legitimate, they're just measuring different things (research/installed-costs.md §1). A single-zone mini-split for a smaller or partial conversion runs a wide $2,000 to $8,500 depending on the source and scope (§2).
None of that capital cost shows up in the per-MMBtu numbers above. Operating savings pay it back over years; how many depends on your usage and the gap between your old fuel and the new one. For the full breakdown of what drives that installed price up or down, see what heat pump installation actually costs, and check your equipment size first with the sizing calculator.
The cheapest million BTU is still the one you never have to buy. Cutting the heating load first (insulation, air sealing) shrinks the equipment size and the price tag on either fuel — see what order to do a retrofit in before pricing the switch.
What rebates do to the math
State and utility rebates are the biggest lever on the capital-cost side right now. Here's what's actually available in 2026, not what an old cost guide still assumes.
The federal 25C tax credit, which used to knock up to $2,000 off a heat pump, expired for anything placed in service after December 31, 2025. If a contractor's numbers still count it, they're wrong by thousands.
The federal HEAR program can put up to $8,000 toward a heat pump, but only in states where it has actually launched to consumers — most states have not, and status changes often, so confirm before counting on it. There's a second catch specific to this page: revised federal guidance issued mid-2026 eliminated HEAR rebates for fuel switching — replacing an existing gas, oil, or propane system with electric. The heat pump rebate is now generally limited to new construction or replacing equipment that was already electric. States that had been paying it out under the old rules have a short window to amend, so do not assume a heat-pump rebate applies to an oil-to-heat-pump or gas-to-heat-pump conversion without checking your state's current rules first.
State and utility efficiency rebates are unaffected by any of that and remain the most reliable lever. The Rebate Matcher shows what's actually live in your state today, and once you've made the switch, here's how to actually collect the money.
Heating fuel cost questions
Is it cheaper to heat with oil or a heat pump?
At current EIA average prices, a heat pump is well ahead. Heating oil at $5.535/gal through an 80% AFUE boiler works out to roughly $50 per million BTU of delivered heat. A heat pump at the national average electricity rate (18.83 cents/kWh) and a standard-climate seasonal COP of 2.4 works out to roughly $23 per million BTU — less than half. The gap narrows in high-electricity-rate regions like New England, but oil rarely wins this comparison at current prices. Run your own numbers above.
What is the cheapest way to heat a house?
At current national-average EIA prices, an efficient natural gas furnace is typically cheapest per unit of delivered heat (roughly $14 to $20 per million BTU depending on AFUE), with a heat pump close behind (roughly $21 to $28 per million BTU) and often cheaper in low-electricity-rate regions such as the Mountain West. Propane and heating oil are consistently the most expensive of the four at national averages. The honest answer depends on your local electricity rate and your equipment's efficiency — that's what the calculator above is for.
How much does propane heat cost per month?
There's no single national monthly figure, because it depends entirely on how much you use. What we can say precisely: at the EIA's final 2025-26 season reading of $2.674 per gallon, run through a typical 80-90% efficient propane furnace, that works out to roughly $30 to $37 per million BTU of delivered heat. Multiply that rate by your own monthly usage (in million BTU, from a past bill or the calculator above) to get your actual number.
Is natural gas cheaper than a heat pump?
At current national average prices, yes, by a modest margin: roughly $14 to $20 per million BTU for gas versus $21 to $28 per million BTU for a heat pump. But this flips with your electricity rate. In the Mountain West, where EIA puts residential electricity at 14.92 cents/kWh, a heat pump can match or beat gas. In New England, at 29.49 cents/kWh, gas keeps a clear lead. There is no single national answer — only your rates give you one.
What is cost per million BTU?
It's the price of one million British thermal units of heat actually delivered into your home, after accounting for how efficiently your equipment turns fuel or electricity into usable heat. It's the only fair way to compare fuels sold in different units, since a gallon of oil, a therm of gas, and a kilowatt-hour of electricity each contain a different amount of raw energy before efficiency losses. See the worked example above.
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