Propane vs. Heating Oil: The Cost and Versatility of Heating Your Home

November 5, 2026

Propane 101

Tags:

How Propane and Heating Oil Compare

Heating oil is a familiar choice across parts of the Northeast, typically in older homes and in areas where natural gas lines haven’t been installed. It sees its highest usage during the colder months, between October and March.

Propane is also used for home heating in areas where natural gas lines don’t reach. It is most common in the Midwest and Northeast. Like heating oil, propane sees its highest demand during the winter season, with about two-thirds of U.S. propane consumption occurring between October and March.

According to the U.S. Energy Information Administration’s (EIA) Winter Fuels Outlook 2026–27, Northeast households that heat primarily with propane are expected to spend about 15% less this winter than last, thanks to lower propane prices and lower expected usage. Homes that heat with oil are projected to spend about 21% more nationally, driven by rising global crude oil and distillate prices.

Both fuels help keep homes warm through the coldest months, but they differ in several important ways that can affect your home year-round.

Versatility

Propane does more than just heat your home. It can run your heating system and other appliances such as the water heater, fireplace, oven, range, clothes dryer, and backup generator — all from the same fuel source. Heating oil is different. It typically fuels furnaces, boilers, and water heaters in some setups, but it can’t power a kitchen range, an oven, or a clothes dryer. If you like the idea of one fuel source running more jobs around the house, that’s where propane pulls ahead.

Delivery and Storage

Propane is stored in a tank on your property and is delivered by a local supplier, either automatically or by request, depending on the service plan. Heating oil works on a similar principle, with fuel stored on-site in a tank and delivered on a schedule or by request.

Where they differ most is placement and upkeep. Propane tanks must be stored outdoors, either aboveground or underground, while heating oil tanks may be located outdoors (aboveground or underground) or in a basement. Heating oil tanks are typically owned by the homeowner, who is responsible for managing inspections and maintenance. With propane, homeowners can choose to own their tank or lease it from their propane supplier. Many suppliers will handle inspections and maintenance as part of the lease agreement. A trusted propane supplier or other qualified professional can walk you through what tank installation and maintenance would look like for your property.

Storage also affects how well each fuel holds up over time. Water can collect inside heating oil tanks, and that moisture could cause the tank to rust from the inside out, which is why oil tank owners are typically advised to have the tank checked for water. Propane, on the other hand, is stored as a liquid in a sealed, pressurized tank and won’t degrade over time when stored properly.

Combustion and Maintenance

According to the Propane Education & Research Council (PERC), propane is an approved clean fuel listed in the 1990 Clean Air Act. Because of its clean-burning properties, properly adjusted propane equipment doesn’t typically leave behind the thick soot buildup common with heating oil — though any heating system still benefits from a professional inspection each season.

Efficiency and Cost

Propane also offers supply and cost advantages worth considering. The U.S. is the leading producer of propane, which helps keep supplies reliable and prices more stable than fuel oil from foreign sources.

Efficiency is another factor. A high-efficiency propane furnace rated at 95% Annual Fuel Utilization Efficiency (AFUE) is less expensive to install as a replacement than a standard-efficiency oil furnace rated at 78% AFUE, and it costs less to operate. For forced-air systems in new homes, PERC estimates a 95% AFUE propane furnace costs nearly $100 less per year to operate than an oil furnace with the same efficiency rating. Actual savings depend on your home, your equipment, and local fuel prices, but that gap is worth considering if you’re already planning to replace an aging furnace.

Reliable Backup Power

Homes that heat with oil typically rely on a separate fuel, such as gasoline or diesel, to run a backup generator, which means storing and managing a second fuel supply. With propane, the same fuel that heats your home and runs other appliances can also power a standby generator. According to PERC, a home with propane appliances and a propane generator can operate independently of the electric grid, and propane generators can also be installed at a lower cost than traditional diesel generators.

If you live in the Northeast or another area affected by winter storms, that’s a practical factor to consider when choosing the best fuel for your home.

A professional uses a screwdriver to service the internal components of a wall-mounted propane boiler.

Why Homeowners Are Considering Propane

For homeowners running a propane fuel comparison against heating oil, the versatility of propane is often the deciding factor. The propane vs. heating oil decision usually comes down to whether you want one fuel handling your home’s heating, cooking, and backup power, rather than juggling separate systems and fuel sources.

Many homeowners may also qualify for propane appliance rebates through state, regional, or local programs, which can help offset the cost of installing a new furnace, water heater, or other eligible equipment.

What to Expect When Switching to Propane

If you decide to make the change, switching to propane is relatively straightforward:

A propane professional visits your property to recommend a tank size and location based on your home’s layout and appliance needs.
Before a new tank is installed, contact 811 to locate existing utility lines like electricity, water, and sewer. Your propane supplier can identify where propane lines are buried to help avoid accidental damage.
Once the tank is set, a Service Technician completes a safety inspection before propane begins fueling your new appliances.
A note on your existing oil tank: Requirements for removing or decommissioning an oil tank vary by location, so it is worth asking your propane installer or a local contractor what applies to your property before making the switch.

With Ferrellgas, flexible delivery options make it easy to fuel your home through the season:

With Auto Fill delivery service, Ferrellgas analyzes your household usage patterns and local weather data to estimate when you are ready for a refill, then schedules it automatically. Qualification and active credit status are required for Auto Fill service.
Will Call delivery service puts you in control of when to order. With this option, customers monitor their own gauge and place orders before the tank level gets low, ideally around 30% or at least 7 business days before needing propane. Customers with Will Call service can place orders by texting ORDER to 573-207-5975*, logging in to MyFerrellgas.com, or calling 888-337-7355.

Every home is different, and the right fuel often comes down to your specific setup. As a trusted propane supplier, Ferrellgas can help you weigh the switch. Learn more about propane for home heating or call 888-337-7355 to speak with a Customer Service Professional.

Upgrade Your Home Heating
With Ferrellgas

*By texting ORDER, you agree to receive automated promotional text messages. Message and data rates may apply. Up to 50 messages per month. Msg frequency may vary. See Terms & Conditions and Privacy Policy. Reply STOP to unsubscribe or HELP for assistance. Messages are sent via automated systems. Delivery is subject to carrier availability. If you have pay-in-advance terms, you will be asked to pay using a secure link we will send from 573-207-5975.