Oil vs. Natural Gas for Home Heating: Which Costs More?














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Only eight percent of U.S. homes use oil heat today. Natural gas is both cheaper and has lower carbon emissions than oil, though it is still a fossil fuel and its green-friendliness is overstated. Most eco-advocates would rather see a shift to truly renewable heating sources like geothermal or solar. Image: iStock/Thinkstock

Dear EarthTalk: Is it true that gas furnaces cost less to run and burn cleaner than their oil counterparts? If I make the switch, how long should I expect it to take for me to pay back my initial investment? And are there any greener options I should consider? 
-- Veronica Austin, Boston, MA

It is true that natural gas has been a more affordable heat source than oil for Americans in recent years. The federal Energy Information Administration (EIA) reports that the average American homeowner will pay only about $732 to heat their home with gas this winter season (October 1 through March 31) versus a whopping $2,535 for oil heat. While the price of natural gas has remained relatively stable in the last few years, oil prices have been high and rising thanks in large part to continued unrest in Middle Eastern oil producing countries. Just two years ago the average winter home oil heating bill was $1,752.

While oil prices are likely to remain high and volatile in the foreseeable future, most energy analysts agree that pricing for natural gas, much of which is still derived domestically, is not expected to rise or fluctuate substantially in the U.S. any time soon. According to EIA economist and forecaster Neil Gamson, the U.S. already has a glut of natural gas and expects even more domestic production to come online soon as drillers are set to open up the Marcellus Shale in Pennsylvania and New York to more gas development.

Only about eight percent of U.S. homes are on oil heat today. Most are in the Northeastern U.S. and were built back in the day when oil was the cheapest way to keep toasty through the long winters. Many utilities have since put gas lines into neighborhoods that didn’t have them in the past, opening the door for homeowners to switch out old inefficient oil furnaces for more efficient gas units.

The federal government’s 30 percent tax credit (capped at $500) for upgrading to a high efficiency furnace expires at the end of 2011 but will likely be extended in one form or another into 2012. In the meantime, some states, municipalities and utilities offer their own incentives and low-interest loans on upgraded, high-efficiency furnaces. Check what’s available in your area via a zip code or map-based search online at the website of the Database of State Incentives for Renewables and Efficiency (DSIRE). Regardless of incentives, gas furnaces tend to cost less than their oil counterparts anyway, but installing one from scratch will incur an extra thousand dollars or two to run a gas line to it from the street. If natural gas continues to be substantially cheaper than oil, the fuel cost savings alone would pay back the up-front equipment and infrastructure investment within five years in most cases.

Environmentally speaking, gas has lower carbon emissions than oil, but hydraulic fracturing (“fracking”)—the highly controversial gas extraction method increasingly employed today (drillers inject water, sand and chemicals at high pressure underground to break through rock and access the natural gas)—takes a heavy toll on surrounding ecosystems and regional water quality. Most environmental advocates would rather see people transition to truly renewable heating sources like geothermal or solar. If you’re going to the cost and trouble of switching out an oil furnace for something new, a geothermal heat pump may cost more ($7,500 and up) than a new gas heating system but will save big bucks and emissions in the long run. For those in reliably sunny areas, a solar heating system will cost even more up front but can deliver similar long term economic and environmental benefits.

CONTACTS: EIA, www.eia.gov; DSIRE, www.dsireusa.org.

EarthTalk® is written and edited by Roddy Scheer and Doug Moss and is a registered trademark of E - The Environmental Magazine (www.emagazine.com). Send questions to: earthtalk@emagazine.com. Subscribe:www.emagazine.com/subscribe. Free Trial Issue: www.emagazine.com/trial.


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  1. 1. oldvic 10:38 AM 12/30/11

    The best overall strategy is:

    1 - insulate;
    2 - if step 1 is not enough, use naturally available energy;
    3 - if steps 1 and 2 aren't enough then choose the most environmentally and economically sustainable supplemental energy.

    Remember that the cheapest and most sustainable energy is the one which is not used...

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  2. 2. sault in reply to oldvic 11:37 AM 12/30/11

    Exactly. Here's some elaboration:

    1. "Insulation" can mean actually putting in insulation (more / better) in your walls, attic, basement, etc. It can also mean getting more energy efficient windows, sealing leaks around doors and vents and putting up good curtains in windows that let in / out too much heat.

    You can also stop heating / cooling rooms you don't use and close those off from the rest of the house when not in use. A programmable thermostat keeps you from paying to heat / cool your home when it isn't needed. Cleaning your air filter for your HVAC system every month is a must if you use it frequently. In addition, the entire HVAC system needs maintenance and cleaning every 18 months or so. Heat exchanger coils can get fouled, reducing their effectiveness.

    Getting a home energy audit is either free or subsidized by your utility and makes TONS of sense. This and all the previous improvements mentioned can often pay for themselves in a year or less and put money in your pocket after that.

    2. Natural energy can be as simple as warming your house with sunlight in the winter effectively using curtains / blinds or even landscaping. For example, a tree on the south side of a home (in the northern hemisphere) with few branches low on its trunk can radically cut your energy bills winter and summer. In the summer, the more direct light from the sun will be blocked by leaves / branches. In the winter with the sun lower in the sky, the sunlight can enter your house and give you free heat.

    Opening your windows at certain times of the day can make sense too depending on the local climate. This is most effective in the warmer months if you can cool your home at night effectively. Letting in the fresh air of a balmy winter afternoon can give you free energy as well.

    3. Geothermal heat pumps can use 1/3 or even 1/4 the energy of even a high efficiency gas furnace / refrig. air unit. These are easier to implement on new construction, but if you need to replace your HVAC system anyway, they make financial sense in most areas.

    After all this, if you want to get a solar array on your house, you might only need one that is 1/2 the size compared to what you would have needed before becoming so energy efficient, as long as you get efficient lighting and appliances too, that is. And hey, if you want to cancel out a lot of your oil consumption, you could get an electric car and power it with the solar array. Since EVs use 1/3 or less energy than gas cars, this is the MOST efficient path of all!

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  3. 3. sault in reply to sault 11:46 AM 12/30/11

    Oops, forgot that bicycles get 900 miles per gallon gasoline equivalent, so ride your bike / walk / take public transportation if / when you can.

    Also, go meatless in your dietary choices 1 or 2 days a week if you're not already vegetarian. When you DO eat meat, it'll be that much better / rewarding and you'll cut the extra energy use needed to produce the meat vs. the plant matter you eat instead. Local / sustainable food helps if the crops / animals are able to grow without much outside assistance from people (pesticides, fertilizers, hormones, antibiotics, genetically modified organisms, etc.)

    This combined with lowering the amount of cheap, plastic / mostly unnecessary consumer goods you buy is pretty much MOST of what we need to accomplish to mostly limit our damage we're doing to our home, Earth.

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  4. 4. skeptech 12:14 PM 12/30/11

    "takes a heavy toll on surrounding ecosystems and regional water quality"

    Is this a science website? Because I would like the author to cite some sources for this highly questionable statement. My studies show that deep well fracking is below the water table and poses no threat to the ecology or water quality. Yes there was a recent EPS report on fracking but the research was not done on the commercial deep well fracking, and its research methodology was high questionable. Peer review of the study has brought up many problems with this EPA report.

    Lets stick to the "Science"

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  5. 5. jvsciguy 01:24 PM 12/30/11

    @skeptech - recent envionmental assessments show thatin many of the older 'fracking' operations done well below the water table still produce incursion of contaminants into the watertable.

    While I suspect this can be done more safely it is clear, historically, that it has not been done well in most cases.

    This is one of many reports that have been released recently: http://news.firedoglake.com/2011/12/09/epa-finds-fracking-contaminated-drinking-water-in-wyoming/

    Other issues are surfacing: http://www.naturalgaswatch.org/?p=381

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  6. 6. skeptech 01:51 PM 12/30/11

    @jvsciguy The EPA did a horrible job on this report and the general oil and gas scientific community is ripping the draft apart. The EPA could not even follow their own sample testing protocols and had samples tested that where well pasted the expiry date. This is only one of the many problem with this report that has been discovered. Overall it was a badly done study and should not be used as a cited source until fully reviewed by the scientific community. Once fully reviewed then the research can be properly put into perspective.

    The following is a independent review of the report done by a reporter:

    Read more: http://trib.com/news/state-and-regional/epa-report-pavillion-water-samples-improperly-tested/article_99512ef4-6d23-5c9b-9038-c676eedd33c2.html#ixzz1i2nZnA2e



    http://www.naturalgaswatch.org/?p=381
    As for your other source it correctly outlines that no baseline data is present. Therefor the data is really meaningless when put into perspective of determining contamination from fracking.

    You would expect "methane concentrations 17 times higher than wells located where fracking was not taking place" that is because there is Natural Gas in the surrounding environment and naturally there would be Natural Gas seeping into the ground water with or without fracking.

    The researches should have compared water well contamination in areas with untapped Natural Gas reserves and the same subsurface structures. This would give a better indication of contamination if any.

    The industry and government guidelines require baseline research before drilling a well and comparison testing after the facking is finished. This correctly shows the effects of the drilling and the environment effects. So far the only contamination comes from run off from the actual drill site where spills or mismanagement causes the contaminations at the surface.

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  7. 7. jvsciguy 02:05 PM 12/30/11

    @skeptech - we will have to wait and see.

    The battle will go on as ther eis much money at stake here.

    Check witht eh Canadians to see more on what can go wrong.

    We have huge reserves of gas here. We need to make absolutely sure we don't do another fiasco like DDT or Freon. These things are way to expensive to recover from. Now is the time to get it right.

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  8. 8. skeptech in reply to jvsciguy 02:51 PM 12/30/11


    I am Canadian and live in the middle of Oil & Gas development, I make sure I am well educated on the benefits and downsides this industry as it directly effects my community.

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  9. 9. Seaglass 05:40 PM 12/30/11

    Fracking has all the potential to become as massively destructive to water reserves on land as Oil drilling has become at sea. You can drill thousands of wells and have no problems, all it take though is a really bad blow out in one and a watershed is ruined forever. Is it worth the risk?

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  10. 10. dwbd 06:53 PM 12/30/11

    A must-see video on The Shale Gas Fraud, Deborah Rogers:

    http://www.youtube.com/watch?v=bYzU4bEfJ5U

    If you don't have the 36 min, at least watch the last 4 mins of the video.

    The Brutal Truth about Shale Gas:

    http://www.nytimes.com/interactive/us/natural-gas-drilling-down-documents-4-intro.html?ref=us

    "...Shale Gas Called a "Ponzi Scheme" ..."

    "...Where is the S.E.C.?..."

    "...This e-mail exchange is between a geologist in Texas and a petroleum geologist who spent about a decade and a half at Phillips Petroleum Company. They discuss whether the hype about shale gas is giving a false sense of security with regard to energy policy…the way that Wall Street investment is feeding the shale gas hype is reminiscent of Enron..."

    Industry Doubts on Shale Gas Economics:

    "World’s Largest Uneconomic Field"

    "A Herd Mentality" on Shale Gas"

    "Shale Gas Inherently Unprofitable, Official Says"

    "Shale Wells Not Economic, Chesapeake Geologist Says"

    "Media Is Ignoring Costs, Investment Analyst Says"

    "Financial Hype on Shale Gas Is Difficult to Understand"

    "Drill Fast, Con Wall Street "Always a Greater Sucker…"

    Meanwhile Congress, is jumping on the Wall St. Shale Gas Bubble bandwagon, with even more fervor than they embraced the Wall St. mortgate/derivatives scam bubble. And trying their best to screw every middle & lower class America by forcing NG prices to rise 3-4X to international pricing, and making America dependent on not only Middle East Oil, but high priced Middle East LNG as well.

    There is your home grown Terrorist Harry "boondoggle" Reid at work. And Barbara "Enemy of America" Boxer, trying to ensure America can be held hostage to Middle East Energy suppliers. Wouldn't want that clean, green, made-in-USA Nuclear Energy.

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  11. 11. sault in reply to Nag nostic 06:14 AM 1/1/12

    Just look at the shelves of any 2nd hand store and you'll see all the stuff that people buy that they don't really need, or that they buy a new, shinier version of before the old item's useful life is over. And this is just the stuff that lasts longer than a few uses and then falls apart. Just think of all that plastic stuff, sitting in a landfill forever, or floating around in multiple garbage patches the size of TEXAS(!) in the Pacific Ocean.

    Why do you need to buy 5 pairs of jeans for $10 that are made in China and fall apart after 6 months? A $50 pair of jeans made in the USA or some other country that actually gives a care about working conditions would fulfill the same function. Why do people need "a new spring wardrobe" every year? It's because the fashion industry makes us THINK we need new styles every year. Planned obsolescence, light bulbs that burn out in months when some of Edison's original models are still burning, shortening product cycles...all of these were invented by some MBA smarty pants to wring more money from customers while giving them ZERO added value for their troubles. Gotta show growth on the quarterly statement for the shareholders, right?

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  12. 12. sault in reply to skeptech 06:17 AM 1/1/12

    The fact that natural gas drilling was rushed ahead before baseline samples were taken shows how reckless some members in the industry can be. What's so hard to understand? The fracking operations inject chemicals into the ground and then the same chemicals show up in drinking water. The people living nearby had been fine until drilling started and then you think it's a mystery that they're suddenly developing all these symptoms? How much do you get from the drilling industry to post on these discussion boards?

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  13. 13. jvsciguy 07:57 PM 1/4/12

    Ohio Earthquake Likely Caused by Fracking Wastewater
    Today, January 04, 2012, 1 hour ago
    Residents of Youngstown, Ohio, received an extra surprise on Christmas Eve and again on New Year's Eve--earthquakes, measuring 2.7 and 4.0 on the Richter scale, respectively. No one was injured and only a few cases of minor damage were reported after the Dec. 31 event.

    http://www.scientificamerican.com/article.cfm?id=ohio-earthquake-likely-caused-by-fracking

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  14. 14. Shoshin 06:37 AM 2/4/12

    Sault also has some great home tips on recycling old foilage from your house plants into toilet paper. But just ignore the chapter on cacti and you should be OK.

    (Apologies Sault, but you got on a Bob Vila/Norm Abrams roll!)

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