Is propane or oil cheaper to heat a house?
It depends on your local fuel prices, but in most years oil delivers heat for a little less because it packs so much more energy per gallon. A gallon of heating oil holds about 138,500 BTU; a gallon of propane holds about 91,500 BTU, roughly a third less. So even when oil costs more per gallon at the pump, you buy fewer gallons to make the same heat. The honest catch is that both fuels swing hard with the market and the region, so the winner in your town this winter may flip next year.
Compare the two on cost per delivered BTU, not price per gallon, and fold in efficiency. At about $4.00 a gallon and 85% efficiency, oil runs near $34 per million BTU of heat in the house. At about $3.00 a gallon and 95% efficiency, propane runs near $34 to $35 for the same million BTU. That is close enough that whichever fuel is cheaper in your area usually wins. Size the furnace for the heat your home actually needs first; run your rooms through our BTU calculator so you are not paying to run an oversized unit on either fuel.
Which is more efficient, a propane or oil furnace?
A propane furnace is more efficient. Modern condensing propane furnaces reach 90% to 98% AFUE, meaning up to 98 cents of every fuel dollar becomes heat in your home. Most oil furnaces top out around 80% to 87% AFUE, so 13 to 20 cents of every dollar goes up the flue. That efficiency gap is real money over a 20-year life and it is the main reason propane closes the cost gap despite holding less energy per gallon.
Oil struggles to go high-efficiency for a physical reason: condensing an oil flame corrodes the heat exchanger and the acidic, sooty exhaust is hard on a condensing setup, so true condensing oil furnaces stay rare and expensive. Propane burns clean and dry, so condensing propane furnaces are common and affordable. If you want the highest-efficiency furnace you can buy on a non-gas fuel, that is a propane condensing unit. See what a good efficiency rating looks like for how these numbers translate into a bill.
Which furnace needs more maintenance and lasts longer?
Oil needs noticeably more maintenance. Oil burns dirty, so an oil furnace builds up soot, sludge, and a clogged nozzle and filter, and it needs a professional cleaning every single year (usually $150 to $400) plus a chimney or flue check. Skip it and efficiency drops and the unit can shut down on a cold night. Propane burns clean, so a propane furnace usually needs only a $100 to $200 tune-up and far less fuss. Our oil furnace maintenance guide covers what that yearly oil service actually includes.
Oil wins on raw lifespan. Oil furnaces are built with heavy steel heat exchangers and commonly run 20 to 30 years when they are serviced; propane and other gas furnaces typically last 15 to 20 years. So the trade is clear: oil costs you more attention and cleaning every year but tends to soldier on longer, while propane asks for less upkeep but you may replace it a few years sooner. Both are combustion appliances, so either way you need working carbon monoxide detectors and a licensed pro for install and annual service.
Should you switch from oil to propane, or to a heat pump?
Switch from oil to propane when your oil equipment is already dying, local oil has gotten expensive, or you want propane's other perks: cleaner air, less maintenance, no oil-tank leak liability, and one fuel that also runs your range, water heater, dryer, and backup generator. Converting is not trivial, though. You keep the ductwork but you swap the furnace and add a propane tank (leased tanks are often cheap or free with a fuel contract), so budget for a new furnace plus tank setup. If your oil system is healthy and oil is cheap where you live, staying on oil is fine.
Before you commit to any combustion fuel, price a cold-climate heat pump. A modern heat pump moves heat instead of burning fuel and can cut heating costs well below both oil and propane, especially as electricity gets cleaner and fuel prices climb. It runs your air conditioning too. The catch is a bigger upfront cost and weaker output in deep cold, where you still want backup heat. Weigh it in our heat pump vs furnace breakdown, and if you are leaning all-electric, gas furnace vs electric furnace covers the resistance-heat option too.
Propane furnace wins on
- +Higher efficiency, up to 98% AFUE
- +Clean burn means less maintenance and no soot
- +One tank also runs your stove, water heater, dryer, and generator
- +Flexible tank options: lease cheaply or buy and own it
Oil furnace wins on
- +About 50% more heat per gallon (138,500 BTU)
- +Often cheaper per unit of heat where local oil is inexpensive
- +Heavy build, frequently lasts 20 to 30 years
- +The fuel itself will not explode from a leak
The verdict
Starting fresh with no natural gas, get the propane furnace. It is more efficient, burns clean, needs less maintenance, and the same tank powers the rest of the house. Choose oil only when you already have a working oil tank and supplier and local oil prices are consistently low, since oil's extra energy per gallon can then win on the monthly bill and the furnace itself lasts longer. Either way, if you are replacing a whole system, get a cold-climate heat pump quote first; it can beat both fuels on running cost while adding air conditioning. Size whatever you choose with the BTU calculator so you do not overpay to run an oversized furnace.
Related: Heat Pump vs Furnace, Gas Furnace vs Electric Furnace, Oil Furnace Maintenance, BTU Calculator.
Frequently asked questions
Is propane or oil cheaper to heat a house?
It depends on local fuel prices, but oil often costs a little less per unit of heat because a gallon of heating oil holds about 138,500 BTU versus 91,500 for propane, roughly 50% more. Propane's higher furnace efficiency narrows the gap, so in most areas whichever fuel is cheaper per gallon that season ends up cheaper overall. Both prices swing with the market year to year.
Which is more efficient, a propane or oil furnace?
A propane furnace is more efficient. Condensing propane furnaces reach 90% to 98% AFUE, while most oil furnaces top out around 80% to 87%. Oil cannot easily go condensing because its sooty, acidic exhaust corrodes the heat exchanger, so high-efficiency oil furnaces stay rare and costly.
Can you convert an oil furnace to propane?
You cannot convert the oil furnace itself; the burner and heat exchanger are built for oil. Converting means replacing the whole furnace with a propane unit and adding a propane tank, while keeping your existing ductwork. Budget for a new furnace plus tank setup, though leased propane tanks are often cheap or free with a fuel contract.
Does oil or propane produce more heat?
Oil produces more heat per gallon. Heating oil holds about 138,500 BTU per gallon compared with about 91,500 BTU for propane, so oil burns denser and you use fewer gallons for the same heat. That energy density is oil's main advantage; propane counters with higher efficiency and a cleaner burn.
Which furnace lasts longer, propane or oil?
Oil furnaces usually last longer, commonly 20 to 30 years, because they are built with heavy steel heat exchangers. Propane and other gas furnaces typically last 15 to 20 years. The trade is that oil demands a thorough professional cleaning every year to reach that lifespan, while propane needs far less maintenance.