BTU-equivalent comparisonEIA residential surveys, both fuelsWeek of 30 March 2026

Propane vs Heating Oil: Price Per Gallon, Cost Per BTU

Per-gallon propane and per-gallon No. 2 heating oil are both liquid fuels delivered by tanker truck, but they have very different energy densities. This page does the conversion to BTU basis.

Propane, per million BTU

$29.24/ MMBtu

$2.674/gal at 91,452 BTU/gal

No. 2 heating oil, per million BTU

$25.99to$32.49

$3.60-$4.50/gal Northeast retail, EIA W_EPD2F_PRT_NUS_DPG

The energy density difference

A gallon of HD-5 propane contains 91,452 BTU; a gallon of No. 2 heating oil contains approximately 138,500 BTU (EIA standard conversion factor). On a raw energy basis, one gallon of heating oil delivers about 1.51 gallons-worth of propane heat. The implication for per-gallon price comparison is direct: heating oil can be more expensive per gallon than propane and still be cheaper per useful BTU of heat delivered.

At current reference prices (propane $2.674 per gallon, heating oil roughly $3.60 to $4.50 per gallon in the Northeast retail market per EIA W_EPD2F_PRT_NUS_DPG), the per-MMBtu costs work out to $29.24 per million BTU for propane and $25.99 to $32.49 per million BTU for heating oil. Heating oil is currently the cheaper fuel per BTU for households where both are available.

Where both fuels compete

The geographic overlap between propane and heating oil residential markets is primarily in the Northeast and New England: Maine, Vermont, New Hampshire, Connecticut, Massachusetts, Rhode Island, parts of New York, and parts of Pennsylvania. In this region, both fuels have established residential customer bases and roughly comparable dealer infrastructure. Households making a new- install or replacement equipment decision in this region legitimately compare the two options.

Outside the Northeast, heating oil residential usage is much smaller. The Midwest, South, and West coasts have minimal heating oil installations. Propane is the predominant non-natural-gas heating fuel in most of the country outside the Northeast. So in practice, the propane-vs-heating-oil decision is primarily a Northeast question; elsewhere it is propane vs natural gas (see that page) or propane vs electricity (see that page).

Why heating oil is cheaper per BTU lately

The per-BTU price relationship between propane and heating oil has fluctuated over the last decade. During the 2014 polar vortex, propane briefly traded above heating oil on a per-BTU basis (propane retail spiked to $4+ per gallon while heating oil sat near $4 per gallon, but propane delivers far fewer BTU per gallon). During much of the 2015-2020 period, the two fuels traded at roughly equivalent per-BTU pricing. Since 2022, the combination of strong US LPG export demand (lifting propane) and softer global diesel-and-distillate demand (modestly easing heating oil) has put heating oil at a per-BTU discount to propane.

The structural relationship depends on the relative economics of natural gas liquids fractionation (the source of propane) versus crude oil distillation (the source of heating oil). When NGL feedstock economics tighten, propane rises relative to heating oil. When crude oil rallies, heating oil rises relative to propane. The two are correlated but not identical. The Mont Belvieu spot for propane and the WTI crude or distillate cash markets are the leading indicators.

Combustion efficiency: does propane catch up?

The Annual Fuel Utilisation Efficiency (AFUE) of modern high-efficiency residential furnaces runs 92 to 98% for both propane and heating oil. Heating oil furnaces have historically lagged slightly behind gas furnaces on AFUE ratings, with most modern oil furnaces in the 85 to 90% range and high-end units reaching 95%+. Modern propane furnaces routinely reach 95 to 98% AFUE. The efficiency differential modestly narrows the per-BTU cost gap in propane's favour, but not by enough to close it at current reference prices.

On a delivered-useful-heat basis (adjusting for AFUE), propane costs roughly 0.9x heating oil per BTU of useful heat in a typical modern installation. The premium narrows from the raw fuel comparison but remains.

Equipment cost considerations

A new high-efficiency propane furnace costs roughly $3,500 to $7,500 installed; a new high-efficiency oil furnace costs roughly $4,500 to $8,500 installed (oil furnaces typically run slightly more because of the burner technology and required oil-tank installation if replacing on an existing oil setup). Conversion between the two fuel types involves both furnace replacement and chimney or venting modification, plus tank replacement (a propane tank vs an oil tank). Conversion is therefore expensive ($8,000 to $15,000 total) and is usually done only as part of a major renovation or because the existing equipment has failed.

Insurance and environmental considerations differ. Oil tanks (particularly buried oil tanks installed before regulations tightened) carry environmental risk and can affect homeowner insurance rates. Propane tanks are generally outdoor above-ground installations with simpler insurance profiles. In many Northeast markets, propane is gaining market share against heating oil partly because of the tank risk and partly because of the broader decarbonisation narrative around oil.

Per-month cost comparison

For a typical 1,800 square foot home in New England (climate zone 5-6) consuming roughly 900 gallons of propane per year, the heating fuel cost comparison runs:

On propane: 900 gallons × $2.674 = approximately $2407 per year.
On heating oil (BTU equivalent): 900 gallons of propane × 91,452 BTU / 138,500 BTU = approximately 594 gallons of heating oil for the same delivered heat. At $4.05 per gallon, that is approximately $2406 per year.

Annual heating fuel difference of roughly $1 per year in heating oil's favour at current reference prices. Over 15 years (a typical furnace lifecycle) the difference accumulates to several thousand dollars, which is meaningful but does not alone justify the conversion cost in most cases.

Volatility comparison

Heating oil pricing is correlated with crude oil markets, which have their own volatility patterns (Middle East geopolitical events, OPEC+ decisions, US shale production growth). Propane pricing is correlated with NGL fractionation and global LPG demand. The two fuels have responded differently to several recent events: the 2014 polar vortex hit propane far harder than heating oil; the 2020 pandemic produced larger per-gallon drops in heating oil than propane; the 2022 Russia-Ukraine event lifted both, with heating oil rising slightly more in absolute terms but propane rising more on a percentage basis. Households making long-term fuel choices should consider both the central level and the historical volatility of each fuel.

FAQ

How many BTU are in a gallon of heating oil?

138,500 BTU per gallon (EIA standard conversion factor for No. 2 heating oil). Compared to 91,452 BTU per gallon of propane, that is roughly 1.51x the energy density.

Is heating oil currently cheaper than propane?

Per gallon, sometimes; per BTU of useful heat, yes at current reference pricing for typical Northeast markets. The relationship varies through time depending on relative crude oil and NGL economics.

Where can I find the EIA heating oil residential price?

EIA series W_EPD2F_PRT_NUS_DPG (No. 2 fuel oil residential weekly), published every Wednesday during the heating season alongside the propane survey. The heating oil and propane surveys share most methodology.

Should I convert from heating oil to propane?

The conversion cost is substantial ($8,000 to $15,000 for furnace plus tank). At current per-BTU pricing, heating oil is cheaper, so the economic case for converting to propane is not strong. The non-economic cases (decarbonisation, oil tank environmental risk, equipment age) sometimes dominate the decision.