Natural Gas Vs. Heating Oil — Which One Is Best for Your Home’s Heating?

gas vs. oil

Natural Gas Vs. Heating Oil — Which One Is Best for Your Home's Heating?

Cold winters make low cost heating systems essential features of New England homes. Heating bills create a financial headache for residents of Pennsylvania that residents of warmer states, such as Florida or Arizona, never have to experience. Although people in Southern California have the San Andreas Fault to worry about, Maryland residents are likely to lay awake at night worrying that their furnaces will break down in the middle of winter.

While every locale has its problems, Northerners can solve many of their worries by investing in efficient heating systems. If you need a new furnace for your home, one of the biggest decisions you'll have is oil vs. natural gas.

Get It Right the First Time

A key factor for success in any endeavor is to get everything right at the beginning. The extreme cold of the northern states can make heating costs an unexpected budget hazard for many families. Before you buy a home with an old heating system, follow these simple tips to decide whether the boiler may make the house unaffordable:

  • Find out the seller's annual winter heating costs.
  • Get copies of previous bills for the house.
  • Consult with alternative fuel suppliers, such as Shipley Energy Home Services, to get better quotes.
  • Determine if you would get better efficiency from a new heating system.
  • Get quotes for new heating systems that are fueled by natural gas and oil, and compare the costs.
  • Calculate the true price of the home by including the cost of the purchase and installation of a new heating system.

Benefits of a New Build Design

If you're building a new home, you have a better chance of installing the best, most efficient heating system. However, don't wait until the plans are finalized before you consider the heating. Start by:

  • Finding the average cost of heating oil in your area
  • Finding the average cost of natural gas in your area
  • Calculating the volume of the rooms in your planned home
  • Calculating the required heat output volume for your home in winter months
  • Getting estimates on fuel usage for each prospective heating system

The best heating system for a new home may not necessarily be the same as the one you have in your existing home. Price and availability of oil and gas will be a large factor when deciding the most efficient heating system for your home.

Replacing a Furnace

If you have analyzed and compared the prices between heating oil and natural gas, you may have decided to convert your home to natural gas. If your furnace has started to break down frequently, you're also faced with the necessity of replacing it. However, even if your furnace hasn't reached the end of its service life, the improved fuel efficiency of newer heating models may make it worth the investment of replacing your furnace. Newer models also come with a warranty, which would eradicate the cost of maintenance.

When calculating the cost of your current heating system to decide whether it's worth replacing, consider the following factors:

  • Local oil vs. natural gas pricesoil gas conversion
  • Current maintenance costs
  • Current fuel consumption rate
  • Current fuel costs
  • Price of different types of heating systems
  • Removal costs
  • Cost of structural changes
  • Installation costs
  • Trade-in value

If you evaluate these factors and decide that replacing your furnace is your best option, your next step is comparing the pros and cons of natural gas.

Natural Gas Pros and Cons

Is natural gas safe? Many homeowners stick to oil for their heating systems because it's familiar, and they worry about the dangers of being poisoned by the fumes from gas heaters — the leading cause of death by carbon monoxide poisoning in the USA. They also worry that a ruptured gas pipe would cause an invisible danger in the house and would be ignited by a spark from an electric switch.

The reality is that well-maintained natural gas heaters are unlikely to emit carbon monoxide. Only unserviced heaters emit deadly fumes. Getting your heating system serviced regularly is not only a safety issue, but it will also help you ensure the efficiency and longevity of your system. The preventative maintenance requirements of gas heat systems cost about the same as the maintenance for heating oil. The added advantage of regular natural gas system maintenance is that it removes the dangers of carbon monoxide build-up.

On a global level, gas is also safer than heating oil for the planet because natural gas sends 25 percent less carbon dioxide into the atmosphere than oil.

Oil Vs. Natural Gas Heating Markets

Another indicator of the best home heating systems in the U.S. is the prevalence of each option. Natural gas is the most popular choice for heating — the government's Energy Information Administration reported that by the end of 2013, 50 percent of U.S. homes were heated by natural gas. Oil supplied only eight percent of residential heating needs.


gas oil users

The Northeast also had markedly different usage statistics, according to the EIA. In the Northeast, 54 percent of homes used natural gas as a heat source and just under 25 percent of homes reported using oil to heat their homes.

However, different fuels require different volumes to create a given amount of heat. A tank measuring one cubic foot containing oil would not produce as much heat as a tank holding one cubic foot of gas. This means natural gas can meet your required heating levels at lower supply volumes than heating oil.

With both oil and natural gas heating systems, newer heaters are more efficient than older systems. If you replace your system, you should expect to see savings in annual heating costs even if you don't switch your fuel type. This is mainly because new heater manufacturers have integrated a range of innovations into heater designs over the past ten years. These manufacturers work to provide better products than their competition, and work towards efficiency based on fuel legislation both in the USA and abroad. Old mechanical systems also get clogged up, worn out, shaky and rusted. Threads on connectors can get worn over time, which can cause fuel to escape. Mechanical parts can also wear and springs can get loose.

When you're shopping for a new heating system, look for a rating called the AFUE (Annual Fuel Utilization Efficiency) which will help you find the most efficient heating systems. The AFUE ratings of gas heating systems generally range from 89 to 98 percent. New oil heaters usually have AFUEs of between 80 and 90 percent. Greater efficiency means lower fuel consumption, which results in lower running costs.

Natural Gas Vs. Oil Costs

When it comes to cost, how do you know if natural gas or oil is cheaper? For starters, the price of crude oil has plummeted since October 2014. By February 2015, crude oil indexes were recording average strike prices at half the cost of the previous September. This sudden drop took the oil market analysts by surprise. Even once market specialists adjusted their ways of thinking, they were shocked to see crude oil prices fall below $50 per barrel in November 2014.

The falling crude oil prices have made oil-fueled heating systems cheaper than the cost of heating your home with natural gas. In one of the coldest weeks of 2015, we reported that fuel oil prices had risen by 35 cents in one week in mid-February, despite a further fall in the crude oil index price that week.

The apparent disconnect between the global price of crude oil and the local price of fuel oil lies in the shipping and processing. If a refinery shuts down because of an accident or industrial action, the price of your oil will rise. A shortage of fuel at a period of peak demand will also increase the local price of oil in Pennsylvania, no matter how little the Brent Crude Index tells you the oil companies can get a barrel of crude oil for in the Persian Gulf.

Local and seasonal supply factors mean that natural gas is ultimately a cheaper source of heating than oil, if you're using cost as a single factor of comparison.

The Importance of Reliability

Reliability of supply is another major factor in the cost of oil vs. natural gas cost. Natural gas has a geographical advantage over oil for suppliers in Pennsylvania. Our state sits on top of a large shale gas reserve that went into production in 2011. In fact, while the U.S. is still dependent on imports to meet all of its oil needs, we now have an abundance of gas and have become an exporter.

Fuel companies can be more confident in maintaining gas supplies because the fuel is available locally — meaning it only needs to travel over relatively short distances. But when it comes to oil, an international conflict between the U.S. and Russia, for example, can disrupt the rate at which oil arrives onshore. An accident, a fuel tanker sinking at sea, or a spillage from a Gulf oil rig can mean that the expected supplies don't make it to U.S. refineries in sufficient volumes to keep oil prices stable. This means gas supplies are more reliable and stable than oil supplies from abroad.

Equipment Costs

If natural gas is a cheaper source of heating, why do families still choose oil over natural gas heat? One of the main factors that deters consumers from choosing a natural gas furnace is the higher cost associated with it. A natural gas heating system will cost more than the equivalent-sized oil furnace.

Not everyone has cash in the bank ready to invest in a new heating system. The availability of credit, its cost and a family's ability to repay heating system financing explains why some choose an oil system.

Remedial Options

Switching from heating oil to natural gas isn't a realistic option for families who don't have the money to buy the more expensive new gas furnaces. However, you don't have to put up with rising maintenance costs and outrageous fuel bills if you decide to stick with your old system. Replacing worn parts and getting an affordable price on maintenance plans will reduce your heating costs dramatically.

If you're not in a position to buy a new system, our equipment protection plans can bring your home heating costs down to a manageable level. You don't always have to invest in a new heating system to reduce the costs of running your furnace.

Final Considerations

furnace tuneup

The price and availability of heating oil and natural gas in your area will be one of the main factors when choosing the best heating system for your home. Knowledge is power, so your first action plan should be to gather the facts and pricing information.  

You should also remember that the Pennsylvania energy market has been shaken up recently by deregulation. The natural gas supply market has changed drastically because of this legislation. Because of this, there are now more heating supply options available to you than ever before.  For example, you can instruct your utility company to buy gas from a specific supplier for delivery to your home because your regular gas provider may not be sourcing your fuel at the best price currently available.

At Shipley Energy Home Services, we have multiple price plans that will work for your family. Although the colder months of winter are over, you should get your energy supplier in place for next winter. Winter is the most expensive season for fuel supplies, because demand is at its peak and suppliers exploit that need to enhance their profits.

Shipley Energy Home Services offers a price lock-in option, which means the cheaper fuel prices available in spring will still be available to you during the peak price period of winter. No matter if you switch your heating source or invest in a new furnace, switching suppliers is another way to save money on your heating bills. Want to learn more about the pros and cons of natural gas, or decide if it's best for your home Contact Shipley Energy today!