How to compare heating costs
Every fuel is sold in a different unit: gas by the therm, propane and oil by the gallon, electricity by the kWh. The fair way to compare them is the price of one million BTU of heat actually delivered into the house, after the furnace or heat pump takes its cut. Then multiply by how much heat the house needs in a year. Here is the math with the values the calculator opens with: a 2,000 square foot house built between 1980 and 2005, typical insulation, climate zone 4, and U.S. average prices.
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1
Estimate the heat loss on a cold day
Zone 4 starts at 22 BTU per hour per square foot for an average house. 2,000 × 22 = 44,000 BTU/h when it's 15°F outside, the zone's design temperature. This is the same model our furnace size calculator uses.
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2
Turn it into heat per year
Divide by the 55°F gap between 70°F inside and 15°F outside: 800 BTU/h per degree. Multiply by 4,500 heating degree days, 24 hours and 0.6 for the sun, people and appliances that help: 800 × 4,500 × 24 × 0.6 = 51.8 million BTU a year.
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3
Price a million BTU of each fuel
Gas: a therm is 100,000 BTU, so $1.48 × 10 ÷ 0.95 AFUE = $15.58 delivered. Propane: $2.73 ÷ 0.091452 ÷ 0.95 = $31.42. Oil: $6.23 ÷ 0.1385 ÷ 0.85 = $52.92. Baseboard: $0.182 × 293 kWh = $53.34. Heat pump: 7.8 HSPF2 ÷ 3.412 is a seasonal COP of 2.29, so $53.34 ÷ 2.29 = $23.33.
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4
Multiply by the heat you need
51.8 × $15.58 = $808 a year for gas (546 therms). The heat pump costs $1,210 (6,646 kWh), propane $1,629 (597 gallons), oil $2,743 (440 gallons) and baseboard $2,765 (15,193 kWh).
The order changes with prices. In a state with cheap power and expensive gas, the heat pump can win outright. Pick your state and the calculator loads its zone and its prices; type your own from a recent bill for the best answer.
Cost per million BTU of heat
This is the number that ranks fuels. It is the fuel price divided by the BTU in one unit and by the equipment's efficiency.
| Fuel and equipment | Energy per unit | U.S. price | Per million BTU |
|---|---|---|---|
| Natural gas, 95% furnace | 100,000 BTU/therm | $1.48/therm | $15.58 |
| Natural gas, 80% furnace | 100,000 BTU/therm | $1.48/therm | $18.50 |
| Heat pump, 7.8 HSPF2 | 3,412 BTU/kWh × 2.29 | 18.2¢/kWh | $23.33 |
| Propane, 95% furnace | 91,452 BTU/gal | $2.73/gal | $31.42 |
| Propane, 80% furnace | 91,452 BTU/gal | $2.73/gal | $37.31 |
| Heating oil, 85% boiler or furnace | 138,500 BTU/gal | $6.23/gal | $52.92 |
| Electric baseboard or furnace | 3,412 BTU/kWh | 18.2¢/kWh | $53.34 |
Two things jump out. Electric resistance heat is efficient in the narrow sense, since every kWh becomes heat, but a kWh is an expensive way to buy heat. And a heat pump turns that same kWh into two to three times as much heat by moving it from outdoors, which is why it beats propane, oil and baseboard in most of the country.
When a heat pump beats gas
In a mixed climate (zone 4), with a 7.8 HSPF2 heat pump and a 95% gas furnace, the break-even is simple: the heat pump wins when electricity costs less than about 8.2% of the gas price per therm. Against propane in a 95% furnace, it wins below about 9% of the propane price per gallon. Against 85% oil, below about 6.6% of the oil price per gallon.
| Gas price per therm | Heat pump wins below | 8.5 HSPF2 heat pump |
|---|---|---|
| $1.00 | 8.2¢ per kWh | 8.9¢ per kWh |
| $1.25 | 10.3¢ per kWh | 11.2¢ per kWh |
| $1.48 (U.S. avg) | 12.2¢ per kWh | 13.2¢ per kWh |
| $1.75 | 14.4¢ per kWh | 15.7¢ per kWh |
| $2.00 | 16.4¢ per kWh | 17.9¢ per kWh |
| $2.50 | 20.5¢ per kWh | 22.4¢ per kWh |
Most colder states don't have power that cheap next to gas, which is why gas stays the cheapest heat for most homes that have it. In warm Southern states the picture flips: the heat pump runs at its best in mild winters, and gas there often costs more per therm, so in Florida, Georgia and Texas it comes out ahead, as the state table below shows. The math tilts when you also need a new central AC: a heat pump replaces both, so the question becomes total cost, not heating alone. Our heat pump savings calculator adds cooling and the install price, and the guide heat pump vs. furnace walks through the decision.
Yearly cost by state
The same 2,000 square foot house, built 1980–2005 with typical insulation, in each state's main climate zone and at that state's prices. Tap a state to load it.
| State | Gas | Heat pump | Propane | Oil | Baseboard |
|---|---|---|---|---|---|
| Minnesotazone 6 | $990 | $2,195 | $2,094 | $4,485 | $4,266 |
| Mainezone 6 | $1,710 | $4,042 | $3,758 | $4,553 | $7,855 |
| Massachusettszone 5 | $1,849 | $2,958 | $3,105 | $3,853 | $6,424 |
| New Yorkzone 4 | $928 | $1,947 | $2,264 | $2,836 | $4,452 |
| Pennsylvaniazone 4 | $791 | $1,402 | $1,915 | $2,664 | $3,206 |
| Illinoiszone 5 | $833 | $1,881 | $1,627 | $3,835 | $4,084 |
| Michiganzone 5 | $802 | $2,125 | $2,053 | $3,816 | $4,616 |
| Ohiozone 4 | $731 | $1,249 | $1,611 | $2,823 | $2,856 |
| Coloradozone 5 | $825 | $1,645 | $1,981 | $3,841 | $3,573 |
| Washingtonzone 4 | $928 | $957 | $1,629 | $2,743 | $2,188 |
| North Carolinazone 3 | $506 | $554 | $1,274 | $1,509 | $1,329 |
| Georgiazone 3 | $631 | $576 | $1,148 | $1,540 | $1,382 |
| Texaszone 2 | $313 | $297 | $583 | $842 | $746 |
| Floridazone 2 | $412 | $284 | $911 | $806 | $714 |
| Californiazone 3 | $679 | $1,211 | $956 | $1,610 | $2,907 |
Propane and oil prices for states EIA doesn't survey use the regional or U.S. average, so treat those columns as a starting point and check with a local dealer.
AFUE, HSPF2 and COP in plain terms
- AFUE (annual fuel utilization efficiency) is the share of the fuel's heat that ends up in your home over a season. An 80% furnace sends a fifth of it up the flue. Condensing furnaces of 90% and up recover heat from the exhaust and vent through PVC pipe.
- HSPF2 (heating seasonal performance factor) is a heat pump's BTU of heat per watt-hour of electricity over a test season. Divide it by 3.412 to get the seasonal COP. The federal minimum for a split heat pump is 7.5; ENERGY STAR asks for 7.8.
- COP (coefficient of performance) is heat out divided by electricity in at one moment. It falls as the outdoor air gets colder. That's why the calculator trims a standard heat pump's rating in zones 5 to 7 and trims a cold-climate model less, the same adjustments our heat pump savings calculator uses.
What EIA expects this winter
The Energy Information Administration's October 2026 Winter Fuels Outlook forecasts average household spending for the 2026–27 heating season of $640 for natural gas (down 9% from last winter), $1,196 for electric heat (up 4%), $1,246 for propane (down 3%) and $2,115 for heating oil (up 21%). Those are averages over all homes, including small apartments and mild states, so a house in a cold zone will spend more. The ranking matches this calculator's at U.S. prices: gas cheapest, then electric heat and propane, with oil near the top.
Tips to cut the heating bill
- Seal and insulate first. Moving from "Typical" to "Upgraded" insulation cuts the heat needed by 10% in this model, whatever the fuel. Attic air sealing and insulation are usually the cheapest heat you will ever buy.
- Set the thermostat back. The DOE says turning it back 7 to 10°F for 8 hours a day can save up to 10% a year on heating and cooling. With a heat pump, use small setbacks so the backup strips don't kick on during recovery.
- Lock in propane and oil early. Many dealers offer pre-buy or budget contracts in summer and fall. Compare their price per gallon with the delivered price in winter.
- Service the burner. Oil boilers and furnaces lose efficiency when the nozzle and heat exchanger get dirty. An annual cleaning and combustion test keep them near their rating.
- Mind carbon monoxide. Any home with a gas, propane or oil appliance needs working CO alarms near sleeping areas. Have a licensed technician check venting when you replace a furnace or water heater.
Common questions
What is the cheapest way to heat a house?
At 2025 and 2026 U.S. average prices, natural gas is usually cheapest, at about $16 per million BTU of heat from a 95% furnace. A heat pump comes second at about $23, then propane at about $31. Heating oil and electric baseboard cost the most, at about $53 each. Your state's prices can change the order.
How much does it cost to heat a 2,000 square foot house?
In a mixed climate like New York or Washington DC, a 2,000 square foot house with typical insulation needs about 52 million BTU of heat a year. At U.S. average prices that is about $810 with a 95% gas furnace, $1,210 with a heat pump, $1,630 with propane and about $2,750 with heating oil or electric baseboard.
Is a heat pump cheaper to run than a gas furnace?
Usually not at average U.S. prices, because gas is cheap compared with electricity. A heat pump rated 7.8 HSPF2 beats a 95% gas furnace only when electricity costs less than about 8.2% of the gas price per therm, about 12 cents per kWh when gas is $1.48 a therm. It does beat propane, oil and electric baseboard in most states.
Is propane or electric heat cheaper?
A heat pump is usually cheaper than propane, and propane is usually cheaper than electric baseboard. At $2.73 a gallon, propane in a 95% furnace costs about $31 per million BTU, a heat pump about $23 and baseboard heat about $53 at 18.2 cents per kWh.
How many therms does a house use for heating?
A 2,000 square foot house with typical insulation in a mixed climate uses about 550 therms a year for heat with a 95% furnace, or about 650 with an older 80% furnace. Cold climates and older, leakier houses use more; warm southern states use far less.
Why does my bill differ from the calculator?
The calculator estimates heat only, from your floor area, climate and insulation. Real bills add fixed monthly charges, delivery fees and taxes, gas used for water heating and cooking, and the winter's actual weather. Divide last winter's heating fuel use into the calculator's numbers to calibrate it.
Sources and assumptions
- Natural gas: EIA, residential natural gas price by state, 2025 annual (2024 for CT, ME, MD, NC, RI and SC, where 2025 is not yet published), converted at 10.36 therms per thousand cubic feet. U.S. average $15.34 per Mcf, or $1.48 a therm.
- Propane and heating oil: EIA Heating Oil and Propane Update, residential prices for the week of October 26, 2026 (U.S. $2.73 and $6.23 a gallon, before taxes). States EIA doesn't survey use their regional or the U.S. average.
- Electricity: EIA Electric Power Monthly, Table 5.6.B, residential average for January to August 2026 (U.S. 18.2¢).
- Energy content: EIA British thermal units: 100,000 BTU per therm, 91,452 per gallon of propane, 138,500 per gallon of heating oil, 3,412 per kWh.
- Winter outlook: EIA, Winter Fuels Outlook 2026–27, October 6, 2026.
- Heat pump ratings: DOE 2023 central air conditioner and heat pump standards (7.5 HSPF2 minimum for split heat pumps) and ENERGY STAR air-source heat pump criteria (7.8 HSPF2 for split systems; cold-climate COP of at least 1.75 at 5°F). Thermostat setback: DOE Energy Saver.
- Climate zones: PNNL, Guide to Determining Climate Zone by County (IECC 2021); each state uses the zone of its largest metro area.
- HomeOutlay assumptions, shared with our furnace size and heat pump savings calculators: heat loss of 9 to 35 BTU/h per square foot by zone, adjusted ×1.3 for homes built before 1980, ×0.8 for 2006 or later, ×1.15 for poor and ×0.9 for upgraded insulation; 70°F indoors; yearly heat = heat loss per degree × degree days × 24 × 0.6; degree days per zone are estimates within the IECC zone limits; heat pump seasonal adjustments by zone are estimates (standard: ×1.1 in zones 1–2 down to ×0.75 in zone 7; cold-climate: down to ×0.85). Fixed monthly charges, delivery fees, taxes, blower electricity and backup strip heat are not included.