Propane vs Natural Gas: Price Per BTU (2026)

Per-gallon propane and per-therm natural gas are different units. This page does the conversion to a common BTU basis and shows when each fuel is the better economic choice for residential heating.

The conversion math

A gallon of HD-5 propane contains 91,452 BTU of energy (higher heating value, the EIA standard conversion factor). One therm of natural gas contains 100,000 BTU by definition (a therm is a heat-equivalent unit, not a volume unit). So 1.094 gallons of propane equals 1 therm of natural gas in raw thermal energy. Once both are converted to a per- million-BTU basis, the comparison is direct.

At the current EIA US residential propane price of $2.674 per gallon, propane costs approximately $29.24 per million BTU. At a typical EIA US residential natural gas price of $1.45 to $1.95 per therm in 2026, natural gas costs $14.50 to $19.50 per million BTU. Propane is therefore roughly 1.7x the per-BTU cost of residential natural gas at these reference prices.

Why natural gas is cheaper per BTU

The fundamental reason is delivery infrastructure. Natural gas arrives at the residential meter via underground pipeline maintained by a regulated utility. The marginal cost per BTU of delivering one additional cubic foot is essentially zero: the pipeline is already there, the compressor stations run regardless, and the customer's meter is a simple counter. The utility recovers its fixed costs through a tariff that includes both a per-therm charge and a fixed monthly customer fee.

Propane arrives via a tanker truck driving to the customer's property, filling a leased or owned tank. The marginal cost of delivering an additional gallon includes the driver wages, fuel, truck depreciation, and insurance for that delivery, plus the regulator service and leak check that the dealer provides on a periodic basis, plus the tank lease amortisation. None of these costs scale down to near-zero the way a natural gas pipeline tariff does.

The efficiency adjustment that complicates the comparison

The raw per-BTU comparison overstates natural gas's advantage because it ignores burner efficiency differences. Modern propane furnaces and water heaters can achieve higher combustion efficiency than equivalent natural gas units, partly because propane's higher heating value density supports more efficient burner designs. The Annual Fuel Utilisation Efficiency (AFUE) rating of a modern high-efficiency propane furnace runs 95 to 98%; the equivalent natural gas furnace runs 92 to 96% in most ratings. The difference is small but real.

Adjusted for delivered useful heat (the BTU that actually ends up heating the house, after combustion losses), the propane premium over natural gas narrows slightly. At typical AFUE differentials, propane costs roughly 1.6x natural gas per useful BTU delivered, slightly less than the raw fuel comparison. The premium remains substantial in absolute terms.

When propane is the better choice anyway

The natural gas per-BTU advantage assumes natural gas service is available. For roughly half of US land area and a meaningful share of rural households, it is not. Natural gas distribution networks generally do not reach low- density rural areas, properties more than a few hundred feet from an existing main, or properties in geographies where the utility has not invested in distribution. Propane fills this gap. For a household 1,000 feet from the nearest natural gas main, the natural gas connection cost can be $10,000 to $40,000 (utility extension policies vary by state), which dwarfs the lifetime fuel cost difference for a typical household.

Propane also wins in several niche scenarios. Properties where natural gas service exists but is unreliable (rural areas with old distribution, frequent winter outages) sometimes maintain propane as a backup. Newly developed properties where the developer did not run a gas main often default to propane. Properties where the owner specifically wants the fuel security of an on-site fuel inventory (a 500-gallon tank holds 60+ days of typical heating consumption) sometimes choose propane despite available natural gas.

Per-month cost comparison

Translating per-BTU into per-month residential heating cost makes the comparison concrete. A typical 1,800 square foot home in a cool climate (zone 5: Iowa, Ohio, Pennsylvania) might consume:

• On propane: Roughly 700 to 1,000 gallons per year, billed at $2.674 per gallon, equals approximately $2139 per year for heating fuel.
• On natural gas (delivered useful heat equivalent): Roughly 730 to 1,090 therms per year (the propane gallons converted to BTU and divided by 100,000 BTU per therm, with a small efficiency adjustment), billed at $1.70 per therm, equals approximately $1530 per year plus the fixed monthly utility customer charge (typically $10 to $25 per month, or $120 to $300 per year).

Annual heating fuel cost difference for this hypothetical household is in the range of $409 to $609 per year in natural gas's favour, depending on the specific tariff. Over a 15-year furnace lifecycle, that is a meaningful but not overwhelming difference, especially weighed against the natural gas connection cost where extension is required.

The supply-chain stability comparison

Natural gas residential pricing is more stable than propane residential pricing on a year-to-year basis, primarily because utility tariffs are regulated and pass through fuel costs with smoothing mechanisms (purchased gas adjustment clauses, true-up periods, hedge programs). Propane residential pricing reflects the wholesale market more directly, with the typical four-to-eight-week lag. During unusual events (the 2014 polar vortex, the 2022 Russia-Ukraine NGL shock), propane pricing has moved considerably more than natural gas pricing. Households comparing the two fuels should weigh both the typical level and the volatility.

Related

• Propane vs heating oil: price per BTU
• Propane vs electricity: cost per BTU
• Residential heating propane price per gallon
• Wholesale vs retail spread
• HD-5 propane specification

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