Electric Heat vs Oil vs Gas Heat: Which Is Cheaper?

Kiplingers ^ | 01/04/2024 | Ellen Kennedy

[SeekAndFind]

With energy bills putting a crunch on the U.S. this winter, comparing the costs of electric heat vs gas heat can be an important decision for homeowners looking to save money. 

When Kiplinger looked at this same question last year, we concluded that gas heat was the cheaper option. However, a new study found flaws in the way electric heating costs are accounted for, changing the cost outlook. Moreover, electricity costs vary substantially from one U.S. state to another. 

In this year’s winter fuels outlook, published by the Energy Information Agency (EIA), it’s forecasted that from November through March, heating-oil customers will pay $1,722; propane users, $1,328; electricity users, $1,072; and gas users, $611. However, according to a recent study from Rewiring American, published by The Guardian, the expected costs for electricity users can be misleading, as it doesn’t distinguish between older electric-resistance appliances and heat pumps. 

Heat pumps are highly efficient, and can cut electricity use by 50% when compared with electric resistance heating, according to the Department of Energy. Because of this, if you’re using a heat pump to warm your home, you’ll likely pay much less than forecasted by the EIA.

Additionally, Rewiring America says in the report that "the agency includes all uses of each fuel in its cost estimates, meaning cost projections for electricity customers include energy used to power other electric appliances such as refrigerators and electronics."

The following graphic was tweeted by the EIA illustrating the data. 

(Image credit: EIA)

Furthermore, there are three positive trends for residential heating customers this year. First, this winter will likely be milder than last winter. Forecasters predict a recurrence of the El Niño weather pattern, which tends to bring warmer, wetter weather for much of the U.S.

Second, the milder winter will mean lower demand - and thus lower costs - for energy. The U.S. Energy Information Agency (EIA) predicts that natural gas will be 21% less expensive this winter. That lower cost of natural gas will also help keep electricity prices from increasing, as more expensive coal-fired power plants are replaced by gas-fired plants.

Finally, newer, more efficient heating technologies continue to get cheaper, particularly as economies of scale and subsidies kick in at the state and federal levels.

Electric heat: cost to run

According to the EIA’s Electric Power Monthly report, the average cost of electricity in the U.S. is 16.21 cents per kilowatt hour or kWh. As stated above, the EIA projects that electric heating costs for U.S. homeowners will average $1,072 for winter 2023-2024. 

The Efficiency Maine Trust provides the following cost breakdown for electric heating systems: 

Swipe to scroll horizontally

Fuel Type (Units)	Cost per Unit Delivered	Heating System	Annual Cost
Electric (kWh)	0.23	Geothermal Heat Pump	$ 1,681
Electric (kWh)	0.23	Heat Pump (ductless)	$ 2,297
Electric (kWh)	0.23	Heat Pump (ducted)	$ 2,871
Electric (kWh)	0.23	Electric Baseboard	$ 6,202
Row 4 - Cell 0	Row 4 - Cell 1	Row 4 - Cell 2	Row 4 - Cell 3

According to the U.S. Department of Energy (DOE), installing a more energy-efficient electric heat pump can reduce energy usage in your home significantly, compared to traditional electric resistance heating such as furnaces and baseboard heaters. The most common type, ducted air-source heat pumps, reduces energy use by approximately 50%. More expensive options like geothermal heat pumps can reduce energy use by up to 60%. This type of upgrade saves you on a monthly basis, but you should include sizable upfront installation costs as part of your bill calculations.

However, the American Council for an Energy-Efficient Economy reports that heat pumps may not provide enough heat in especially cold northern regions, resulting in a need for alternative fuel sources and higher bills. In addition, many homeowners may not be able to use the most efficient geothermal heat pump type, which requires digging a large trench near or under your home, according to the DOE.

Gas heat: cost to run

According to the EIA’s Electric Power Monthly report, the average cost of gas heat in for U.S. homeowners will average $611 for winter 2023-2024.

The Efficiency Maine Trust provides the following cost breakdown for gas heating systems:

Swipe to scroll horizontally

Fuel Type (Units)	Cost per Unit Delivered	Heating System	Annual Cost
Natural Gas (therm)	2.04	Natural Gas Boiler	$ 2,267
Natural Gas (therm)	2.04	Natural Gas Room Heater	$ 2,317
Natural Gas (therm)	2.04	Natural Gas Furnace	$ 2,523
Row 3 - Cell 0	Row 3 - Cell 1	Row 3 - Cell 2	Row 3 - Cell 3

The verdict

The most common electric heat systems have higher monthly operating costs compared with the most common natural gas systems, based on the most recent U.S. government statistics.  

In some cases, geothermal electric heat pumps can save you money over the most cost-efficient natural gas boilers. They are generally more efficient than gas furnaces and use less source energy on average in moderate climates. However, they may not be sufficient to fully heat your home if you live somewhere with cold temperatures. Additionally, geothermal systems aren't even an option for homeowners without land for an underground trench. 

No matter your choice, you can also meaningfully lower your heating costs by doing a few important things.

• If you only use certain rooms in your home, try to use spot heating rather than running your whole home system. 
• Keep your thermostat setting at 68 degrees for the majority of each winter day.
• Consider getting a home energy audit to identify fixes that optimize efficiency and comfort. 
• Once you have the audit in hand, apply fixes like caulking, weather stripping, insulation, and air filter changes.
• Don't forget to claim the energy efficiency home improvement tax credits from the Inflation Reduction Act.

For more energy-saving content, check out our home savings hub.

[9422WMR]

We have electric heat and air plus propane in case the power goes out.
Currently dropping below 20F here in central Texas.
Im ready for summer!

[IamConservative]

I have a geothermal water furnace. December, January and February I see bill around $200. $150/month give or take the rest of the year. The unit seems to be able cool more efficiently than heat cost wise.

The house is 2,500 sq/ft. Touchstone Energy efficient. It keeps up with heating, unless it is below zero for an extended period. I have a wood burner to supplement.

[Gaffer]

I had to live in England for a year at the end of my service. Wife and baby boy and I had to travel 50% TDY. We had a house off base and it was a 50s-60s model with all electric heat baseboards.

It did have a small coal/wood stove in the main hallway that mainly heated water in a tank in the attic that fed the electric water heater and a small wall radiator. My wife didn’t use the stove because it was difficult to start burning and handling the coal, etc. so the only room she heated was the baby’s room with electric heat. When I was home we still only heated the baby’s room but I ran the boiler all the time. I’ll never go electric.

[Gaffer]

Indeed. That ole electric meter spinning like a helicopter

[newfreep]

If you wanna stay warm with your buds in the dorm, PROPANE.

Eric Clapton, is that you?

[Texas Fossil]

That is true. We have NG in town, but at our farm the house is on propane.

In Texas winters are short and it is not the issue that it is up North.

With propane at my farm house it is a one time charge to fill my tank, no monthly fees for connection. All that is on LP there is the floor furnace and optional LP heat on central heat and air system. The central heat and air system there has electronic ignition, no pilot. (Does not work when electrical power is out.) But the floor furnace has a pilot light, but it is turned off most of the year. We have electric water heater at the farm, it is REA supplier, pretty cheap rates.

In town NG is a lot cheaper than LP heating. But there is a monthly fee whether you use anything or not. I have a NG water heater in town. The furnace on the AC system and the water heater are all the appliances that I have on NG in town.

[Codeflier]

The cost per therm for natural gas they show is 3.5X higher than what I pay.

[oldasrocks]

Milder my butt. It is -6F this am here in Missouri. We are not used to winter weather so cold.

[lgjhn23]

“..Same here. I save a lot with a variable speed heat pump,...”

Yep...they’re pretty efficient and can produce about three times the heat for the same amount of energy that the strips would use within their efficiency range.
For colder weather, we use a propane boiler, low-speed pumps, circulate water thru PEX up under the floor joists (properly installed, insulated, etc.) to create a radiant heat floosr, and we do this in 3 different zones throughout the house.
It can be 20 below outside, the house (6” exterior walls with R23 and R30+ in the ceilings) will stay at a nice 72 degrees with minimum use of fuel. That boiler could easily be changed out to utilize a wood pellet boiler should FJB really go off in total insanity.

[cyclotic]

We moved to Maryland about 14 years ago. Homes here can be either electric, oil or gas. One of the few non-negotiables when I was looking for a house was natural gas heat.

[Chickensoup]

Not available. Leftists threaten to end supply here.

[Chickensoup]

Here there is heat pump over to k-1

[alfa6]

The Forecast high for Kansas City today is -2 F
YeeHaw

Regards

alfa6 ;>[

[Chickensoup]

In the old days mainframes used to heat office buildings locally.

Wood however heats wonderfully and is great for the environment.

[Semper Vigilantis]

Propane here as well. I do have an electric heater out in the shop/office area, but the main house id propane. Generator is propane as well.

[Tell It Right]

That boiler could easily be changed out to utilize a wood pellet boiler should FJB really go off in total insanity.

I have the same line of thinking. My solar and battery storage provides 83% of the electricity I need through the year in my all-electric home, including charging the EV (16K miles per year, not counting the 10K miles we charged it last year away from home). I'm happy with having to buy only 17% of the energy we need for the home. Going further is running head long into the law of diminishing returns and wouldn't be worth it fiscally.

But in the back of my mind I'm always thinking the "what if" scenario of the Dims making it painful to buy even that 17% of my power from the grid. What if they make it too costly? What if they set up a mark-of-the-beast style social credit score?

So I already have in mind what it'd take to be 100% energy independent.

[bert]

There are too many variables to provide a definitive answer

To ask the question is ignorant and irrelevant

[hecticskeptic]

Eric Clapton, is that you?
~~~~~~~~~~~~~~~
No, it’s JJ.

[Tijeras_Slim]

Maybe where you are. Try 7300’ in New Mexico.

[PeterPrinciple]

Don’t forget to claim the energy efficiency home improvement tax credits from the Inflation Reduction Act.

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