How to Compare Heating Fuel Costs: The Real Price Per BTU

TL;DR: To compare heating fuels fairly, divide the price per unit by the BTUs it delivers—natural gas typically costs $10–$20 per million BTU, propane $25–$35, heating oil $20–$30, and resistance electric $30–$50. Sticker price alone misleads because a gallon of oil delivers 138,700 BTU while a gallon of propane delivers only 91,500 BTU.

_Last reviewed: July 2026 · 5 min read_

Landlords replacing a furnace or evaluating a new property often ask which heating fuel costs less to run. The answer isn't obvious from the pump price or the utility bill—propane might look cheaper per gallon than heating oil, but you burn through it faster. Natural gas seems inexpensive per therm, but how does that stack up against electric baseboard per kilowatt-hour?

Okoniq Property Hub lets you log fuel deliveries, track thermostat settings, and compare heating costs year-over-year so you can spot waste and make smarter equipment decisions.

Which heating fuels are available where I live, and what do they cost per unit?

Four fuels dominate U.S. residential heating: natural gas (piped), propane (tank delivery), heating oil (tank delivery), and electricity (resistance or heat pump). Regional availability varies—natural gas serves cities and close-in suburbs, propane and oil serve rural areas, and electricity is everywhere.

As of December 2024, national average retail prices hover around $13 per thousand cubic feet for natural gas, $2.85 per gallon for propane, $3.40 per gallon for heating oil, and 16¢ per kilowatt-hour for residential electricity. Your actual rate depends on state taxes, delivery charges, and whether you lock in a contract or pay spot price. Oil and propane customers who buy in summer often save 20–30% compared to mid-winter emergency fills.

Rural landlords rarely have a choice—if gas mains don't reach the property, you're deciding between propane, oil, or electric. Urban properties almost always use natural gas where available because infrastructure cost is sunk. If you're evaluating a property with baseboard heater maintenance needs, factor replacement cost into your fuel-choice math.

How do I calculate the real cost per BTU for each fuel type?

British Thermal Units (BTUs) measure heat energy—one BTU raises one pound of water one degree Fahrenheit. Every fuel delivers a known BTU count per unit, and dividing the unit price by BTUs yields an apples-to-apples cost.

Natural gas: One therm = 100,000 BTU; one thousand cubic feet ≈ 1.037 therms. If you pay $13 per thousand cubic feet, you're paying roughly $12.54 per therm, or $12.54 per 100,000 BTU. Dividing by 100 gives you $0.0001254 per BTU, but it's easier to think in dollars per million BTU: $12.54 per million BTU.

Propane: One gallon = 91,500 BTU. At $2.85 per gallon, cost is $2.85 ÷ 91,500 = 0.00003115 per BTU, or $31.15 per million BTU.

Heating oil (#2 fuel oil): One gallon = 138,700 BTU. At $3.40 per gallon, cost is $3.40 ÷ 138,700 = 0.0000245 per BTU, or $24.50 per million BTU.

Electricity (resistance heat): One kilowatt-hour = 3,412 BTU. At 16¢ per kWh, cost is $0.16 ÷ 3,412 = 0.0000469 per BTU, or $46.90 per million BTU. Heat pumps deliver 2–3× the heat per kWh (COP of 2–3), cutting effective cost to $15–$23 per million BTU in moderate climates, but that's a separate efficiency discussion.

Use this formula for any fuel: (price per unit ÷ BTU per unit) × 1,000,000 = cost per million BTU. Once you have that number for each option, the cheapest fuel is obvious.

What efficiency factors change the real delivered cost?

BTU content measures raw fuel energy; furnace efficiency determines how much of that energy heats your rooms. A 95% AFUE (Annual Fuel Utilization Efficiency) gas furnace delivers 95,000 usable BTU per therm; an 80% AFUE oil furnace delivers 110,960 usable BTU per gallon of oil.

Divide the per-million-BTU fuel cost by the equipment efficiency (as a decimal) to find the delivered cost per million BTU. For example, natural gas at $12.54 per million BTU in a 95% furnace costs $12.54 ÷ 0.95 = $13.20 delivered per million BTU. Oil at $24.50 in an 80% furnace costs $24.50 ÷ 0.80 = $30.63 delivered.

Old equipment penalties add up fast. A 1980s oil boiler running at 65% efficiency turns that $24.50 raw cost into $37.69 delivered—nearly triple the cost of a modern gas furnace. If you're deciding whether to convert from oil to gas, run the math on both fuel and a boiler maintenance basics retrofit; sometimes a high-efficiency oil boiler closes the gap enough that expensive pipe-laying isn't justified.

Electric resistance heat (baseboard, wall heaters, electric furnace) is 100% efficient at the point of use, but the raw fuel cost is so high that delivered cost still exceeds gas and often oil. Heat pumps flip the script—they move heat rather than generate it, achieving 200–350% efficiency (COP 2–3.5), making electric heat competitive in mild winter zones.

How do seasonal price swings and delivery minimums affect annual cost?

Propane and heating oil prices spike in winter and drop in summer; natural gas and electricity prices stay more stable year-round. Landlords who lock in a summer fill on propane or oil can save $0.50–$1.00 per gallon compared to February spot rates. A 275-gallon oil tank filled in August at $2.80 instead of January at $3.60 saves $220—real money on a tight-margin rental.

Delivery minimums matter for small rental properties. Propane and oil suppliers often require 100–150 gallon minimum orders; if your tenant uses 60 gallons a month, you're forced into less-frequent deliveries that expose you to price swings. Natural gas flows on demand with no delivery surcharge, smoothing cash flow. Electric heat has no delivery issue but the highest per-BTU cost in most markets.

If you own a seasonal home closing for winter, compare the cost of keeping a gas furnace at 50°F (minimal continuous burn) versus draining the system and using electric space heaters only in occupied shoulder seasons. Gas wins if you heat six months; electric wins if you heat two.

When does switching fuels make financial sense?

Fuel switching pays off when the annual delivered-BTU savings exceed the upfront conversion cost within your hold period. A $6,000 gas-line extension and furnace swap that saves $1,200 per year pays back in five years—acceptable for a long-term hold, marginal for a flip.

Compare delivered cost per million BTU for your local fuel prices and equipment efficiency, then multiply by your property's annual BTU load (find it on last year's utility bills or ask your HVAC contractor for a heat-load calculation). If you burned 800 gallons of oil at 80% efficiency, you consumed 800 × 138,700 ÷ 0.80 = 138.7 million BTU. At $30.63 delivered per million BTU, that's $4,249. Switching to 95% gas at $13.20 delivered per million BTU drops the cost to $1,831—a $2,418 annual saving that justifies a $10,000 conversion in four years.

Don't forget to price out high-efficiency heat pumps if your climate supports them. A cold-climate heat pump with a COP of 2.5 at 16¢/kWh delivers heat for $18.76 per million BTU—cheaper than oil, nearly tied with propane, and far cheaper than resistance electric. Rebates through the Inflation Reduction Act can cut upfront cost by $2,000–$8,000 depending on income brackets, tightening payback further.

Log every fuel delivery, HVAC service call, and thermostat schedule in Okoniq so you have clean data when the furnace dies and you need to decide fast. Accurate records turn a panicked guess into a confident spreadsheet.

FAQ

How do I find the BTU content of my heating fuel if it's not listed on my bill?

Natural gas: 1 therm = 100,000 BTU (some utilities bill in CCF; 1 CCF ≈ 103,700 BTU). Propane: 91,500 BTU per gallon. #2 heating oil: 138,700 BTU per gallon. Electricity: 3,412 BTU per kWh. These are industry-standard values; your fuel supplier will confirm if you ask.

Is propane cheaper than heating oil if the price per gallon is lower?

Not necessarily—propane delivers 91,500 BTU per gallon while heating oil delivers 138,700 BTU. Divide each fuel's price per gallon by its BTU content to compare fairly. At $2.85 propane and $3.40 oil, oil costs $24.50 per million BTU and propane costs $31.15—oil wins despite the higher sticker price.

Should I switch from oil to natural gas if gas becomes available on my street?

Run the numbers: calculate your annual delivered-BTU cost on oil, then on gas, and compare the annual savings to the upfront cost of running a gas line and installing a gas furnace. If savings exceed $800–$1,000 per year and you'll own the property five-plus years, switching usually pays. Also consider resale—gas heat appeals to buyers in markets where oil is falling out of favor.

How much can I save by upgrading from an old 70% efficiency furnace to a 95% model?

If you're burning natural gas at $12.54 per million BTU, a 70% furnace costs $17.91 delivered per million BTU and a 95% furnace costs $13.20. On a 100-million-BTU annual load, that's $471 saved per year. The upgrade pays for itself in 8–12 years if the new furnace costs $4,000–$6,000 installed, faster if fuel prices rise or rebates apply.

Do heat pumps really cost less to run than gas furnaces in cold climates?

In USDA zones 5–7 (think Pennsylvania, Ohio, Illinois), modern cold-climate heat pumps maintain a COP of 2.0–2.5 down to 5°F, delivering heat for $18–$23 per million BTU at 16¢/kWh electricity—competitive with $13–$15 gas in a 95% furnace, cheaper than propane or oil. Below 5°F, backup resistance heat or a dual-fuel setup keeps costs predictable. Federal and state rebates often make the upfront cost comparable to a gas furnace replacement.

This is educational information, not financial advice. Fuel prices, equipment costs, and rebate programs vary by state and change frequently—consult a licensed HVAC contractor and your accountant for property-specific recommendations.