Which option is really cheaper?
If you live in the Northeast, you probably do not have many options when it comes to heating your home. If you have natural gas, you’re definitely one of the lucky ones. Natural gas tends to be an extremely cost-effective way to heat your home. Unfortunately, it is just not available everywhere. And unless there are subsidies involved, conversion to gas can be extremely costly. Electric heat and heat pumps tend to work for small condos, apartments, and places with mild winters. But for the rest of us, we have two choices: heating oil and propane.
Propane can be used for many things, including gas fireplaces, generators, and pool heaters. As such, it is actually not uncommon to have both in a house. Since the heating expenses are the biggest piece of most homes’ overall usage, we will focus on choosing between propane and heating oil to heat your home.
When To Switch Between Propane And Heating Oil
If your home is in need of a new furnace or boiler, that is often the time this subject comes up. The system itself – be it a furnace or a boiler – tends to be the most expensive component involved in the changeover. As such, it becomes a good time to consider the changeover to a new fuel. The factors to consider though are as
follows:
- The Tank: You must consider where you put the tank, and who will own it
- Efficiency & BTUs: While propane is toutes as ‘more efficient’, oil actually produces more heat per gallon
- The Freedom to Choose a Supplier: Make sure you are able to choose between different suppliers. This will give you flexibility and the ability to negotiate prices.
The Tank(s)
Believe it or not, this can be the deciding factor for a lot of folks. A good oil tank in a basement can last 30+ years. If your tank has plenty of life in it, there’s no real reason (from a cost efficiency standpoint) to switch to propane. On the flip side, if you have propane tanks that are provided by your propane supplier, the cost of buying your own
heating oil tank may be a turn off.
There’s also the visual aesthetic: propane tanks are hard to hide. Unlike a heating oil tank, which you can hide in a basement, propane tanks must be outside. This means they are either in view, or must be buried in the ground. Heating oil tanks can be installed out-of-sight in a basement, crawl space, or garage. The homeowner always owns the tank, gives them the freedom to find the best deal and order from a home heating oil provider of their choice!
Remember, who owns the tank is critical!
The most over-looked factor, however, is WHO OWNS THE TANK. When a company tries to get you to switch to propane, they will always want to provide their own tanks. They will tell you that this saves you money, since you don’t need to buy tanks. In the near term, that may be true. But this also locks you into buying ONLY from them. This eliminates any control you have over pricing, delivery timing, etc. In fact, even if you are fed up with the prices you are paying, it is illegal in many states to have one supplier’s tanks filled by another supplier! The only way to switch propane suppliers if you are paying too much is to have the tanks removed, and have another company install their
own. Or pay to have your own tank(s) installed, which is what you wanted to avoid in the first place.
If you heat your home with heating oil, you will always own the tank. Whether it is in the basement, garage, or outside of the house, you can use any supplier you want to have the tank filled. This gives you maximize flexibility and keeps you out of an expensive predicament.
Takeaway: If you go with propane, make sure you own the tank to avoid being tied to one company.
Efficiency & BTUs
Folks often look at the price per gallon to determine if propane is less expensive than heating oil. This overlooks two major factors that must also be considered: efficiency, and BTUs. BTUs (British Thermal Units) represent how much heat is generated by a gallon of fuel. Heating oil can generate 138,500 BTUs per gallon. Propane can generate up to 91,500. There is one more factor though, and that is the efficiency of the burner. Modern propane furnaces are often 95% – and sometimes more – efficient. This means that 95% of every gallon of propane is converted to heat. Oil burners, on the other hand, are only 80-90% efficient. We’ll use 85% efficiency for our calculation below:
- Propane: 91,500 * 0.95 = 86,925 effective BTUs per gallon
- Heating Oil: 138,500 * 0.85 = 117,725 effective BTUs per gallon
To do an apples-to-apples comparison, we should look at how many gallons of propane are required to produce as much heat as a gallon of heating oil. Since heating oil generates 117,725 BTUs compared to 86,925 for propane, you will need 1.35 gallons of propane for every gallon of heating oil to generate the same amount of heat (117,725 / 86,925 = 1.35). To do an easy price comparison, take the price per gallon of propane and multiply it by 1.35 to see how it compares to the price per gallon of heating oil.
Takeaway: You need 1.35 gallons of propane for every gallon of heating oil
Your Freedom To Choose A Supplier And Compare Prices
Another overlooked factor is the freedom to shop between suppliers. With heating oil, there are numerous suppliers to choose from. If you are reading this, then odds are you are already getting the best rates in the area! Our price per gallon remains extremely competitive when compared to other local companies and you will be hard pressed to find a better deal! You can sign up for our FREE Automatic Delivery Service or Place Individual Orders Here or over the phone (203) 791-1763.
With propane, it is EXCEEDINGLY difficult to accurately compare prices. Nearly 95% of propane tanks in the Northeast are owned by the provider. As such, there are so few homeowners shopping for prices, that providers make it nearly impossible to price compare. Don’t believe me? Call five different suppliers and see for yourself. They want to know your total annual usage, whether you own your own tank, whether you want to be on autofill or will-call, and whether you want to pay them for a tank monitor. There simply is not a ‘price per gallon’ that most dealers will publish or quote. And once you sign up for automatic delivery, you have no say in the price. They keep delivering propane at whatever price they decide, and you keep paying.
The Bottom Line:
Home Heating Oil is far more cost effective than propane!
As of this writing, heating oil prices in CT range from $2.47 to $2.79 a gallon. (See Our Pricing Online and See How Much You Can Save!) Propane tends to be hovering in the upper $2-$3 range, with some homeowners reporting $4 or higher in some parts of the state. Since you need 1.35 gallons of propane to generate the same amount of heat as one gallon of heating oil, the math is easy here. Due to the exorbitant cost per gallon of propane and the significantly less efficient burn rate, we would have to see a major uptick in oil prices for propane to truly become competitive.
With all this in mind, be careful when your HVAC provider is selling you on the benefits of switching to propane. In most cases, the main reason is that it is more profitable for THEM. They will provide the tanks which means that you are locked into buying propane from whoever installed it. When you contractually cant shop around, you put yourself in a vulnerable position for these companies to price gouge you!
