Should I Install a Gas, Oil, or Electric Furnace?

If you’re in the market for a new furnace, you’re probably trying to find the best energy source for your home: electric, oil, or gas. Each furnace type can meet basic needs relatively efficiently with modern equipment. However, the cost of each system will probably be a large factor in your purchasing decision, so keep reading to learn about the costs associated with each system!

Ongoing Cost Comparison

Comparing the costs of heating for each fuel source becomes somewhat complicated because relative costs vary. Two independent studies by Penn State University and Sensible Energy Solutions used a similar methodology to calculate the cost-per-million-BTUs for each energy source.

With similar pricing for natural gas, oil, and electricity, their conclusions are similar.

Base pricing for the Penn State study was:

  • Natural Gas     $1.15 per therm (100,000 BTUs = 1 therm)
  • Fuel Oil            $2.50 per gallon (138,000 BTUs per gallon)
  • Electricity        $0.11 per kWh  (1 kWh = 3,412 BTUs)

The Sensible Energy survey came up with:

  • Natural Gas    $1.10 per therm
  • #2 Fuel Oil      $2.50 per gallon
  • Electricity       $0.10 per kWh

Calculations for Efficiency

Given the input pricing for both studies is nearly identical, calculating the costs per 100,000 BTUs would next depend on efficiency. For example, an old burner in a fuel oil furnace may only generate 70% efficiency. A replacement can bring that efficiency rating to 85%. Natural gas furnaces tend to heat with 90% to 97% efficiency.  Electric heaters work with an efficiency of 100%.

For the comparison, the Sensible Energy study used following efficiency factors were used:

  • Fuel Oil: 80%
  • Natural Gas: 90%
  • Electricity: 100%

Cost Conclusion

Using the above assumptions, the Sensible Energy cost-per-year for heating a moderate-size home (in Portland, Oregon, to be transparent) was projected to be:

  • Natural Gas = $733
  • Electricity: $1,758
  • Fuel Oil = $1,875

Overall, natural gas furnaces tend to cost the least to operate. However, there are a few caveats to that statement, including:

  • All of these figures assume that the furnaces are well-maintained. A furnace that does not have annual inspections and tune-ups will not be as efficient as one that has them, so these figures are only relevant if you take good care of your furnace.
  • These figures only consider ongoing costs. There are different costs associated with installing gas, electric, and oil furnaces, and the make and model will affect the installation costs, and even the ongoing costs, to a degree.

Furnace Installation in Baltimore

Need more information about furnaces before you make your decision, or are you ready to schedule an appointment? Either way, the HVAC experts at All Seasons Heating & Cooling are ready to help! Contact us online or call us at 443-304-2379 to get in touch with a knowledgeable and friendly member of our team.


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