Heating oil vs. propane: which costs less to heat a home?
Price per gallon misleads. Compare cost per million Btu delivered, and see where a heat pump fits.
At this week’s U.S. averages, delivered heat costs about $50.24 per million Btu from heating oil ($5.915/gal, 85% efficient), $34.33 from propane ($2.826/gal, 90% efficient) and $21.29 from a heat pump with a seasonal COP of 2.5 at 18.16¢/kWh.
A gallon of heating oil holds about 138,500 Btu; a gallon of propane about 91,452 Btu, roughly a third less (EIA). So propane at the same price per gallon is much more expensive heat, and a cheaper propane price can still lose.
The fair comparison
Divide the price by the useful heat in a unit of fuel: price ÷ (Btu per unit × efficiency). Efficiency matters: an older oil boiler may convert 80% of its fuel to heat, a modern condensing propane furnace 95%, and a heat pump moves two to three times more heat than the electricity it uses over a season (a coefficient of performance, or COP, of 2 to 3), less in very cold climates.
Where each fuel wins
- Heating oil is common in New England and the Central Atlantic. It follows diesel prices closely, so it was hit hard by the 2026 distillate squeeze.
- Propane is cheapest in the Midwest and Plains, where it is produced and stored, and most expensive in Florida and the Northeast.
- Heat pumps tend to win where electricity is cheap and winters are moderate; in states with high power prices the gap narrows.
Plug in your own state, prices and equipment in the home heating cost calculator, and see weekly prices on the heating oil and propane pages.