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Heating oil has reached nearly $6 a gallon in parts of the country — the highest in more than a decade. With the cost of comfort stretching budgets thin, homeowners are exploring options.
“Over the past year, we’ve experienced a rise in concern from our customers about their heating oil bills,” says Stefan Petkovic, operations manager of Paraco’s HVAC and plumbing division, serving New England. “Customers spent thousands of dollars during the last heating season and are expressing their anxiety about this season.”
Like many propane suppliers, Petkovic has been busy over the past year helping homeowners transition to a clean-burning and more affordable fuel alternative. Petkovic estimates he oversaw 25–30 oil-to-propane conversions last year. Likewise, Steve Chase, president and owner of FSi Oil and Propane in Springfield, Massachusetts, counts nine changeouts, up from three in 2021.
“Most of our conversions happened in the last six months of 2022,” Chase says. “That’s when it really started to pick up.”
Confronting cost
While propane is cheaper than oil for home heating, some homeowners may question the upfront cost of converting. Switching to propane is not a small investment, but the payoffs can be big. Be prepared to talk numbers.
Chase tells homeowners they can expect a payback in 2–3 years. That’s an expedited timeline compared with years past, when oil prices were lower.
Propane suppliers also emphasize the benefits beyond space heating. Propane fuels gas stoves, dryers, backup generators, and water-heating appliances, helping curb electricity costs.
“We’re really promoting the fact they can cook with it, they can clean with it, they can dry their clothes with it, they can heat their water with it, and heat their homes. And they can put in outdoor amenities for entertaining,” Chase says. “There’s some ancillary advantages, as well.”
Not only is propane a cheaper fuel, but furnaces and boilers powered by it are more efficient than their oil-fueled counterparts.
“I typically provide this simple example when explaining the difference in efficiency: A new oil-fired boiler is typically 86 percent efficient, which means that for every dollar you spend on oil, 86 cents is spent on usable heat, while 14 cents go out the flue pipe as exhaust,” Petkovic explains. Compare that to a condensing propane furnace, which can achieve up to 98 percent annual fuel utilization efficiency, and homeowners can clearly see the benefits long term.
Limitations of electricity
As oil prices peak, another source of warmth is spurring consumer interest: electricity. Builders and contractors are increasingly navigating discussions with their clients about electric heat pumps. These appliances are soaring in popularity, but they have limitations in extreme climates.
“Heat pumps, no matter what anyone says, are not going to take care of the average home here,” Chase says, referring to the Northeast.
For clients interested in heat pumps, you might suggest a dual-fuel system, which combines the efficiency of an electric unit with the reliability of a gas furnace. The gas furnace kicks on when the heat pump can’t extract enough heat energy.
Beyond cost savings
While the ultimate goal for many homeowners is to lower utility bills and improve comfort, making the switch to propane comes with several other advantages.
- Bye bye, oil tank: Many homeowners are relieved to rid their basements of a 200-plus-gallon oil tank, freeing up square footage and eliminating toxic leaks.
- Less maintenance: Oil furnaces require considerably more maintenance due to a buildup of soot and carbon. “That’s an energy cost in my opinion,” says Tom Soukup, principal of Patriot Water Heater Co. in Lancaster County, Pennsylvania. “Gas is cleaner and easier to maintain. Overall, propane is a much better solution than using oil.”
- Easier to install: Oil furnaces can be vented only one way — up. That can present installation challenges. Propane furnaces are more flexible because they can vent out of a side wall.
- Greener: Cost isn’t the only consideration when it comes to fuel choice. More homeowners are prioritizing the environment. Compared with oil, propane for space heating is the greener option, producing 10 percent fewer greenhouse gases.
