Heating cost comparison: Oil heat vs gas heat vs electric heat prices

Heating prices

This is the third post in our Beginner’s Guide to Heating Bills, it follows average heating bills and heating fuel use.

When a boiler or furnace is working it turns fuel into usable heat.

Because this occurs at varying efficiencies the price of usable heat can be very different than the price of fuel.

In this post we are going to compare the cost of oil heat, gas heat, electric heat and wood heat in the US and UK.

US Heating Cost Comparison

In the image at the top of this post we compared the typical cost of heat for different fuels based on average prices and typical conversion efficiency.

The units are $/million British Thermal Units (BTU), which as an Australian, living in the UK, looking across the pond,  I find very strange.

What these heating costs show is that in the US both fuel oil furnaces and electricity furnaces are an expensive way to heat a home.  To get cheaper heat using electricity you need a heat pump.  The very cheap natural gas prices in the US mean gas heating is much cheaper, explaining its dominance for central heating.

A few things are worth noting.  These figures are based on the average system efficiency shown in the brackets.  If this increased the price would come down and  if the efficiency was worse it would be more expensive(as for an old furnace).  Secondly, these are only fuel costs.  A full evaluation for a new system choice would include capital costs of the system.  The low cost of electric heating systems may explain part of why they are more common in milder climates, as well as limitations on gas infrastructure.

UK Heating Cost Comparison

In the UK electric heating is the most expensive by some margin.

For this comparison we’ll use the default units of pence/kWh of usable heat.

UK heating prices

Heating your home with standard electric heaters is almost three times as expensive as using heat from a natural gas boiler.

This reality is often overlooked when people try to economize by using electric space heaters.  If you have gas central heating it can be more sensible to use radiator valves to limit heating to a small number of rooms.

As before these prices are for the fuel only and are affected by the actual efficiencies.  For comparing a new install you would want to consider capital costs of the heating system too.  For the carbon intensity of different heat sources see our Shrink Your Housing Footprint page.

Next up in this guide is the sources of home heat loss.

  • Mark Yates

    Talking of heat costs – you know I was tired of my energy bill going up and up – I had a think and wondered how much gas my old boiler was using up. So I decided to go for it and get some quotes for a new boiler, after all they use less gas (as they’re energy efficient) plus they are so reliable too.

    I struggled to find a good quote as the big names wanted big money – but then I looked into STL Heating as I heard they do good prices plus after reading their reviews I decided to give them a try. Well, not only did they give me a free boiler quote – but the price was much cheaper than the other places I’d tried! So as I lived in North West, I gave them the workd and they’ve done a brilliant job of replacing my old boiler ! very happy.

  • mccallister

    These articles saying gas is cheaper are all wrong. Gas isn’t cheaper. You can’t look at it as a per-unit calculation. If it takes way more gas to heat the same space compared to electric heat, then it’s not cheaper.

    Here are my recent bills. I am DYING for someone to explain this because I’m enraged about it.

    15 years living in 1-bedroom apartments and condos, only with electric power:
    No bill ever more than $50 a month. Ever.

    Now, having moved to a 3-bedroom that for some reason has gas and electric:
    Gas bill: $60 a month
    Electric: $75 a month!!! Seriously….I still can’t believe it as I type this…

    So I want someone to explain how that’s even remotely possible. And just having 2 extra bedrooms doesn’t come close to explaining those numbers. I’m paying more than double, and gas is supposed to be cheaper.

    The gas ONLY provides the heat for the home too. Nothing else. the electric powers the lights, outlets, water heater, appliances, etc.

    So, if heating the home accounts for 44% of energy expenses (which I saw on another site), and if my heat comes from gas, and if gas is supposedly so much cheaper – then I have a few questions:

    1) How is my gas bill HIGHER than 15 years of electric bills? Those bills covered everything in the home. This gas bill covers ONLY heat. Please explain that to me — especially if gas is supposedly cheaper.

    2) How is my electric bill HIGHER, now that supposedly 44% of what it used to provide is now being provided by gas?

    Any experts out there who can explain this? I am totally dumbfounded by how absurd it is…

    Could I have an electrical issue, perhaps? Do all my appliances just suck (literally)? Is the gas furnace a piece of junk? Or is the “gas is cheaper” just wrong when you really compare apples to apples?

    • powerqball

      There are so many factors you are missing here that it is impossible to really answer you. Number of bedrooms in itself isn’t a good indicator of expected cost to operate.
      1. Was the 1 BR apartment on a floor above other apartments, because if that’s the case you are getting a huge amount of heat from the apartments below you. If not, how many sq ft was it, and how many exterior walls did you have? Insulation is critical, and if you have very few exterior walls there will be MUCH less heat loss than in a single family house. Condos and apartments are always going to be more efficient because of their shared walls.
      2. You don’t mention anything about appliance usage in the new place. The largest demands for energy are heating/cooling, followed by heating of water and then the rest of your appliances.
      3. Are you on public natural gas, or do you have a Liquid Propane (LP) gas tank at your house that must be filled? LP gas is substantially more expensive than piped natural gas, so you are losing some of the gain of the cheaper more efficient gas heating.
      Too many factors too consider to write them all here.

      • mccallister

        Thanks for the comment – much appreciated.

        I am aware of the condo thing. Yes, you are correct, we were on the second floor of condo, though it was a corner so we had two walls. The 3-bedroom had two floors, but also 2 shared walls (it was a townhome in between two others). So technically, it had only two walls as well, just bigger ones.

        I believe it was public natural gas.

        And appliance usage should be less – because the gas was heating the house, not the electric. That’s what I don’t understand. Everyone always says heating/cooling is the highest cost. So if the HIGHEST cost item is now being done with gas, the remaining heating bill should be substantially lower.

        And in the summer, heating is a non-issue anyway. Yet our summer bill was still $60/month.

        We just moved to another 3-bedroom, 1st floor apartment with two walls again, not far from the old one. First month’s summer power bill: $30.

        A $30 difference in the summer months of a similarly sized place?

        The dollar amounts of difference are just too great for normal explanations, it seems to me.

        Could there be some kind of electrical problem somewhere? That’s the only thing that I can fathom.

        • powerqball

          Is there air conditioning in the apartment? Heating OR cooling are typically the greatest cost, followed by the hot water heater and then other appliances. If you are using AC then that would easily cost more going from the 1st floor to the 2nd floor of a building since the heat rises to the higher floors. There are many calculators online that can estimate your electric usage based on every little appliance you have plugged in and use. I personally didn’t think a $30 to $60 electric bill sounded like that much of a difference, since around here even if you use ZERO electricity the minimum monthly bill is $26 just to have electric service. Each little thing certainly can add up quickly, like just running more lights, more TVs, using more hot water (if it’s electric hot water heater instead natural gas), or anything else plugged could possible make up that difference. I guess it is also possible that there was an electrical problem where something was constantly drawing power whether it was being used or not, or perhaps even power from that apartment being connected and used somewhere outside of the apartment. Sounds like it was a good idea to have gotten out of there at least though.