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.

The Lean Mindset

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.

30 Day Shrink Guide
  • 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?