Why the Cheapest Fuel Depends on Where You Live
"Which heating fuel is cheapest" has no national answer, because regional price spreads are far larger than most people expect. Propane on the East Coast has run around $3.26/gal against roughly $1.96 in the Midwest — a 66% gap for the identical product, driven by pipeline access, storage, and delivery distance.
Big enough that the ranking flips. Running the same 1,800 sq ft cold-climate home through this calculator on typical regional prices:
- Northeast: natural gas ≈ $1,229 → heating oil ≈ $1,648 → heat pump ≈ $1,679 → propane ≈ $2,272
- Midwest: natural gas ≈ $725 → heat pump ≈ $1,074 → propane ≈ $1,377 → heating oil ≈ $1,477
- South: heat pump ≈ $1,007 ≈ natural gas ≈ $1,008 (effectively tied)
- West: natural gas ≈ $1,103 → heat pump ≈ $1,611 → heating oil ≈ $1,670
Note the reversal: in the Northeast heating oil beats propane, in the Midwest propane beats heating oil. Advice written for one region is actively wrong in the other. In the South a heat pump and natural gas are close enough that the decision comes down to whether you need cooling anyway — and there, a heat pump gives you both.
Natural gas wins in every region where it's available, which is the one genuinely national conclusion. The real question for most households is what to do when it isn't available on your street — and that's where the regional spread decides between propane, oil and a heat pump.
Use the region selector above to load typical prices, then overwrite them with your own bill. Regional averages hide wide variation within a region, and a delivered-fuel quote can differ substantially from the state average depending on your supplier and contract.
Ceiling Height: Why a Taller House Costs Less Extra Than You'd Think
Almost every heating estimate you'll find — including the cost-per-square-foot figures underneath this one — is built on a housing stock with 8 ft ceilings. If yours are 9, 10 or vaulted, the usual instinct is to scale by volume: 9 ft ceilings are 12.5% more air, so 12.5% more heat. That overstates it, and by roughly double.
Split your annual heat loss into the part a taller ceiling actually grows and the part it doesn't:
- Grows with height. Wall conduction, because wall area is perimeter × height. And air infiltration, because leakage is air changes × volume — and infiltration alone can run to about a third of the heating energy a house uses in a year.
- Doesn't grow at all. Your ceiling or roof, and your floor or slab. Those are the two largest single surfaces in the house and both are fixed by footprint — a 9 ft ceiling doesn't add a square foot to either. Windows and doors usually don't change either; a taller room generally has the same windows in it.
Take those two groups at roughly half the load each and a foot of extra ceiling adds around 6%, not 12.5%. That's the adjustment this calculator applies: 9 ft ≈ +6%, 10 ft ≈ +13%, 12 ft ≈ +25%.
You will see a larger number quoted — HVAC sizing guidance commonly adds about 10% of capacity per foot over eight. That isn't a contradiction, it's a different question. Sizing is about peak output on the coldest hour of the year, with extra margin for stratification, and an undersized furnace is a callback the contractor has to drive back out for. Annual fuel burned is a different quantity, and it follows the envelope.
One consequence worth spelling out, because it's the opposite of what most people assume. Compare a 3,000 sq ft house with 8 ft ceilings against a 2,675 sq ft house with 9 ft ceilings. Those two hold almost exactly the same air — 24,000 against 24,075 cubic feet. But in a mixed climate on average gas prices, the taller, smaller house runs about 5% cheaper to heat. Equal volume does not mean equal cost. Footprint is what drives the roof and floor losses, and those are the surfaces doing the most work. If you are choosing between plans, square footage is the more expensive dimension to add.
Two caveats. Above about 10 feet, and especially with a vaulted or open-to-above space, stratification starts to matter on its own: warm air collects overhead where nobody is, the thermostat down at chest height keeps calling for heat, and the trade typically adds 10–15% for it. A ceiling fan on low winter reverse recovers much of that, which is why we haven't built it into the number — whether you pay it depends on what you've done about it. And for a vaulted ceiling, enter the average height, not the height at the peak.
What a Million BTU of Heat Actually Costs
The per-MMBtu figure under each result is the one number worth writing down. It's what a million BTU of delivered heat costs you after the equipment's efficiency is taken out — and unlike the annual total, it doesn't depend on your house at all. Same fuel prices, same figure, whether you're heating 1,200 sq ft or 5,300.
It also explains a comparison that confuses a lot of people: why propane costs more per MMBtu than natural gas even when the per-gallon price looks reasonable. A therm of natural gas is 100,000 BTU. A gallon of propane is only 91,500. So at $1.70/therm and $2.50/gal, through furnaces of the same 80% efficiency, gas delivers heat at about $21/MMBtu while propane is around $34 — roughly 60% more, for what the burner treats as nearly the same job. The gap is energy content and delivery economics, not efficiency.
The same arithmetic is why a heat pump can beat natural gas on electricity that looks expensive per kWh. Electric resistance at 18¢/kWh delivers heat at about $53/MMBtu. A heat pump running at a COP of 2.5 moves 2.5 units of heat per unit of electricity, so the same electricity delivers the same heat at about $21/MMBtu — into a dead heat with gas. Compare fuels on delivered heat, never on the sticker price of the unit they're sold in.
If You Can't Afford Your Heating Bill
If the number above is more than your household can cover, that is a common situation this winter and there is established help for it. Two things worth knowing:
- LIHEAP (the Low Income Home Energy Assistance Program) is the main federal program for heating bills. It is federally funded but run by each state, and it pays your utility or fuel supplier directly. Eligibility is generally based on income relative to the federal poverty level or your state's median income. There is also a crisis component for households facing shutoff or running out of deliverable fuel like oil or propane.
- Most cold-climate states restrict utility disconnection during winter, and most states provide year-round protection where a household member depends on electrically powered medical equipment and a doctor documents it. The dates, income limits and application steps vary by state and change from year to year.
Because these rules are set state by state and revised annually, we deliberately do not list dates or thresholds here — an out-of-date figure on this page could cost someone their heat. Go to the source instead: the LIHEAP Clearinghouse (liheapch.acf.gov) maintains current state-by-state disconnection policies, and your state public utility commission publishes the rules your utility must follow.
Two practical notes that apply almost everywhere. Protection from disconnection is not forgiveness — the bills keep accruing and you still owe them, so it is worth asking your utility about a payment arrangement rather than simply waiting. And call your utility before you fall behind rather than after; arrears programs and payment plans are considerably easier to arrange at that point.
How to Calculate Heating Costs by Fuel Type
Comparing heating costs across fuel types isn't straightforward because each fuel has different energy content and each heating system has different efficiency. A therm of natural gas contains 100,000 BTU of energy, but an 80% efficient furnace only delivers 80,000 BTU of usable heat. A heat pump, by contrast, moves heat rather than generating it — so it can deliver 2.5x more heat energy than the electricity it consumes.
The formula that matters is: Cost = (Heat needed ÷ System efficiency) × Fuel price per unit of energy. Once you convert everything to a common unit (BTU of delivered heat), the comparison becomes apples-to-apples.
Natural Gas
Natural gas is the most common home heating fuel in the U.S., used in about 47% of homes. Standard gas furnaces run at 80% AFUE (Annual Fuel Utilization Efficiency), meaning 80% of the gas burned becomes usable heat. High-efficiency condensing furnaces reach 95–98% AFUE. At $1.70/therm and 80% efficiency, natural gas delivers heat at roughly $21.25 per million BTU — typically the cheapest fossil fuel option in most U.S. markets.
Heat Pump
A heat pump moves heat from outside air into your home rather than generating it by burning fuel. This makes it 200–400% efficient — it delivers 2–4 units of heat energy for every 1 unit of electricity consumed. The efficiency rating is called COP (Coefficient of Performance). A modern heat pump with a COP of 2.5 running at 18¢/kWh delivers heat at about $21–25 per million BTU, competitive with gas in most markets and significantly cheaper than electric resistance, propane, or oil. Cold-climate heat pumps maintain meaningful efficiency down to -15°F, making them viable across most of the continental U.S.
Electric Resistance
Electric furnaces and baseboard heaters are 100% efficient at converting electricity to heat — but electricity is an expensive fuel. At 18¢/kWh, electric resistance heat costs about $53 per million BTU, making it the most expensive common heating option. In states with very high gas prices or very low electricity rates, the gap narrows, but electric resistance heating is generally only economical in mild climates where the heating season is short.
Propane
Propane is common in rural areas without natural gas service. It contains about 91,500 BTU per gallon and propane furnaces typically run at 80–95% efficiency. At $2.50/gallon and 80% efficiency, propane delivers heat at roughly $34 per million BTU — more expensive than natural gas and competitive with or slightly cheaper than electric resistance, depending on local electricity rates. Propane prices are also more volatile than natural gas, often rising sharply in cold winters.
Heating Oil
Heating oil is predominantly used in the Northeast, where older housing stock was built before natural gas lines were widespread. It contains about 138,500 BTU per gallon. At $3.80/gallon and 85% efficiency, heating oil delivers heat at roughly $32 per million BTU. Oil prices are tied to global crude markets and can fluctuate dramatically — homes with oil heat are exposed to significant price risk in volatile energy markets. The ongoing shift from oil to heat pumps in the Northeast is partly driven by this volatility.
Which Fuel Is Cheapest for Your Home?
In most U.S. markets, the ranking from cheapest to most expensive for delivered heat is: natural gas → heat pump → propane ≈ heating oil → electric resistance. However, this order shifts significantly based on local utility rates. In states like Washington and Oregon where electricity is cheap ($0.09–0.10/kWh) due to hydropower, heat pumps are often the cheapest option even compared to natural gas. In high-electricity-cost states like California or New York, gas typically remains cheaper for baseload heating, though a heat pump may still make sense for efficiency and carbon reduction reasons.
To see how your specific numbers compare, adjust the fuel rates in the calculator above to match your local prices. Your gas and electric bills show your exact rates.