Heating oil usually costs about $3.25-$4.50 per gallon, while natural gas commonly runs $1.20-$2.00 per therm, including delivery charges. For equal useful heat, oil often costs more, but local fuel prices, furnace efficiency, climate, and conversion expenses can change the comparison.
| Item | Low | Average | High | Notes |
|---|---|---|---|---|
| Heating oil | $3.25/gal | $3.85/gal | $4.50/gal | Delivered residential fuel estimate |
| Natural gas | $1.20/therm | $1.55/therm | $2.00/therm | Commodity and delivery charges vary |
| Annual fuel for 100 million BTU of heat | $2,760 | $3,270-$1,720 | $3,825 oil / $2,220 gas | Oil at 85% efficiency; gas at 90% |
| Gas conversion from an existing oil system | $4,000 | $8,000 | $15,000+ | Equipment, gas service, venting, and site work |
Typical heating oil and gas bills for a 100-million-BTU home
Using the fuel prices above, an oil furnace operating at 85% efficiency needs about 850 gallons to deliver 100 million BTU of heat. At $3.25-$4.50 per gallon, that is roughly $2,760-$3,825 in fuel. A 90%-efficient gas furnace needs about 1,110 therms, or approximately $1,330-$2,220 at $1.20-$2.00 per therm.
Under these assumptions, gas fuel is less expensive by about $540-$2,500 per 100 million BTU. This is a fuel-only comparison, not a forecast of a particular household bill. Actual usage depends on insulation, thermostat settings, weather, and heated floor area. Assumptions: 100 million BTU of delivered heat, oil furnace at 85% efficiency, gas furnace at 90% efficiency.
What oil delivery and gas service charges add
Fuel is only part of the bill. Oil customers may pay delivery fees, minimum-order charges, tank service, and emergency delivery premiums. Natural-gas bills typically combine a per-therm supply rate with monthly customer and distribution charges, which can make the effective price per therm higher for low-use homes.
| Quote component | Heating oil range | Natural gas range | What to check |
|---|---|---|---|
| Fuel or supply | $3.25-$4.50/gal | $1.20-$2.00/therm | Compare delivered oil with gas supply plus delivery |
| Monthly account or delivery charges | $0-$25/month | $10-$35/month | Fees depend on provider and service plan |
| Annual system maintenance | $150-$350 | $100-$250 | Cleaning, inspection, and routine service |
| Tank or service-line work | $500-$3,000+ for tank work | $500-$5,000+ for a new gas service line | Access and local utility requirements affect cost |
Compare the full delivered cost, not just the advertised fuel rate. Gas customer charges can be spread across the year, while oil deliveries may arrive in larger, irregular purchases. Ask whether a quoted oil price includes delivery and whether a gas rate includes distribution fees.
How furnace efficiency and fuel prices shift the break-even point
Oil furnaces commonly operate around 80%-90% annual efficiency, while newer gas furnaces often reach 90%-96%. A more efficient appliance uses less fuel, but upgrading solely to improve efficiency may not pay back quickly if the existing system is in good condition.
At $3.85 per gallon, oil at 85% efficiency costs about $3.27 per 100,000 BTU of useful heat. Gas at $1.55 per therm and 90% efficiency costs about $1.72 for the same heat. If gas rises to $2.00 per therm, its equivalent becomes about $2.22. These estimates exclude fixed monthly charges and maintenance.
The meaningful comparison is cost per unit of delivered heat, adjusted for equipment efficiency. Oil contains about 138,500 BTU per gallon; one therm of natural gas equals 100,000 BTU.
Why Northeast oil homes face different prices than gas-connected regions
Heating oil is most common in parts of the Northeast, where delivery access and local competition influence quotes. Homes near established gas mains may have lower conversion costs and more provider options. In areas without nearby gas infrastructure, extending a service line can erase years of potential fuel savings.
Fuel prices can vary substantially by state and season. A practical local comparison should use current delivered oil quotes and the gas utility’s total residential rate, not a national average. Regional availability can matter as much as the posted price per gallon or therm. Winter delivery demand, road access, and provider minimums can also affect an oil order.
Three annual fuel examples at different heating loads
These examples apply the same assumed prices and efficiencies to different amounts of useful heat. They exclude fixed charges, maintenance, and equipment payments, so they help compare fuel rather than total ownership expense.
| Useful annual heat | Oil at $3.85/gal | Gas at $1.55/therm | Estimated gas fuel savings |
|---|---|---|---|
| 60 million BTU | About 510 gal / $1,960 | About 670 therms / $1,040 | About $920 |
| 100 million BTU | About 850 gal / $3,270 | About 1,110 therms / $1,720 | About $1,550 |
| 150 million BTU | About 1,275 gal / $4,910 | About 1,670 therms / $2,590 | About $2,320 |
Higher heat use increases potential fuel savings, but does not automatically justify conversion. The estimate assumes steady efficiency and prices; unusually mild weather or a different local rate can change the result.
When switching from oil to gas costs more than the fuel savings
Changing fuel can require a new furnace, gas piping, venting, electrical work, permits, and removal or closure of the oil tank. A straightforward conversion where gas service is already available may cost around $4,000-$8,000. A new service line, difficult vent route, tank removal, or major code work can raise the project to $10,000-$15,000 or more.
For example, $1,500 in annual fuel savings takes about five years to offset a $7,500 conversion, before maintenance differences or financing. If the oil furnace needs replacement soon, compare the incremental cost of a gas system with the cost of replacing it with another oil unit. Include the full installed conversion price in any payback calculation.
How to lower oil or gas heating costs without replacing equipment
Request comparable quotes that show fuel price, delivery, fees, and service terms separately. For oil, ask about price-lock plans, automatic delivery charges, minimum orders, and tank inspection. For gas, compare the all-in therm rate and fixed monthly charges, and check whether changing suppliers affects the delivery portion of the bill.
Sealing drafts, maintaining the burner, replacing a dirty filter, and using a reasonable thermostat schedule can reduce fuel use without changing systems. Avoid paying for premium equipment based only on its efficiency label; compare the estimated fuel savings with the installed price and expected years of use.
The lowest-cost choice is often the system already installed when it is safe, maintained, and not near replacement. For a new or failing system, compare at least two itemized bids and include tank work, utility fees, permits, and removal in the total.