Why the Answer Flips by Region
Take a home that burns 800 gallons of oil a year in an older 80% boiler, and price a new 86% oil boiler against a new 95% condensing propane system at typical regional prices:
| Region | Oil / propane price | New oil | New propane | Break-even propane price |
|---|---|---|---|---|
| Northeast | $3.85 / $3.30 | $2,865 | $3,365 | $2.81 |
| Midwest | $3.45 / $2.00 | $2,567 | $2,039 | $2.52 |
| South | $3.70 / $2.85 | $2,753 | $2,906 | $2.70 |
| West | $3.90 / $2.75 | $2,902 | $2,804 | $2.85 |
In the Northeast, where most oil-heated homes are, oil is about $500 a year cheaper. In the Midwest it's the other way round by about the same amount, because Midwest propane is cheap and oil isn't. The South and West are close enough that your own delivery prices decide it. A single national answer is wrong for half the country whichever way it points.
The Number That Matters: Propane's Break-Even Price
A gallon of heating oil holds about 138,500 BTU. A gallon of propane holds about 91,500 — two-thirds as much. So per gallon, propane has to be about a third cheaper just to match oil on energy.
Efficiency moves that line, and it moves it in propane's favor. Propane can burn in a condensing furnace or boiler at 95% or better, while new oil equipment sits around the federal minimums of 86% for a hot-water boiler and 83% for a furnace; condensing oil units exist but are rare. Put a 95% propane system against an 86% oil boiler and the rule of thumb becomes:
That's why a conversion quote that includes a non-condensing propane furnace is a poor deal in most places: it gives away the one advantage propane has.
Price It Against a Heat Pump Too
If your oil system is due for replacement, the real choice is often three-way. On the same 800-gallon home at the same regional prices, a heat pump running at a seasonal COP of 2.2 to 2.5 comes out at about $2,950 in the Northeast — close to new oil — but $1,900 in the Midwest, $1,560 in the South and $2,490 in the West, below both delivered fuels. Many homes keep the existing system for the coldest nights and let a heat pump carry the rest of the season, which beats either fuel on its own. Our guide to replacing a boiler with a heat pump covers how that works with baseboard and radiators, and the heat pump size calculator turns your oil deliveries into the capacity you'd need.
Beyond the Price per Gallon
- Who owns the tank. Propane tanks are often leased from the supplier, which usually means you can only buy from that supplier. An owned tank lets you shop around each fill. Oil tanks are typically owned by the homeowner.
- Price plans. Both fuels are sold on pre-buy, capped and will-call plans. A cheap summer pre-buy price can make either fuel look better than its winter market price; compare like with like — our pre-buy vs cap vs market calculator shows how each plan plays out.
- Maintenance. Oil burners need regular cleaning and nozzle changes to hold their efficiency; condensing propane equipment needs its condensate drain and venting kept clear.
- What else it can run. Propane can also fuel a range, dryer, water heater or generator. Oil heats the house and the water, and that's it.
- The old tank. Converting from oil means dealing with the existing oil tank; ask whether removal or abandonment is in the quote.
To see these fuels alongside natural gas, electric resistance and a heat pump at once, use the heating cost by fuel calculator. If gas service is available on your street, propane vs natural gas is the comparison to run instead.