Gas Furnace vs. Oil Furnace vs. Propane Furnace

Though gas furnaces may be the heating source of choice for most homes in the U.S., not everyone has the luxury of a readily available natural gas source. In these instances, many homeowners instead turn to oil or propane gas furnaces to meet their heating needs. If you are upgrading your furnace or looking for an alternative to your existing unit, observing how each one stacks up in terms of cost, life expectancy, and maintenance can help you better determine which furnace is best suited to your individual needs and budget.

Initial Cost

With so many different furnace brands on the market, initial prices can vary widely from make to make.

The cost of a gas furnace generally falls in the range of anywhere from $650 to $1,400, though those numbers increase to approximately $1,800 and $4000 with installation included. On average, upfront costs are around $1,200 for the furnace alone.

Oil furnaces, on the other hand, are a bit more costly than the traditional natural gas furnaces, and at their lowest are still higher than the average gas furnace. Ranging in price from around $1,300 alone to $4,500 including installation, all the way to $6,800 with installation, oil furnaces can come with an expensive initial price tag.

Finally, propane furnace prices fall somewhere between gas and oil. In a 2000 square foot home, a propane furnace can run anywhere from $3000 to $5,000 with installation included or between $800 and $2,000 for the furnace alone.

Though natural gas furnaces are the most popular choice, in some cases, conversion kits are available for converting your existing furnace to propane. This requires installation by a professional technician, of course, though it may save you on the steep initial cost of a propane new unit should you decided to switch fuel sources.

Long-Term Cost


This table is based on 2016 average fuel type prices of US: $0.12 per kilowatt-hour for power, $3.00 per MMBtu for gas, $2.02 per gal for propane & $2.13 per gal for heating oil.

Though many homeowners may be tempted to purchase the most affordable furnace, the initial cost can be deceiving. Without considering fuel and operating costs, it’s much more difficult to determine long-term value.

Natural gas and oil have the most affordable costs per heating system annually, though gas comes in slightly under oil as the cheapest. Propane, however, is nearly twice as expensive as natural gas and oil and can result in hundreds of dollars more each year to heat your home. It’s also important to look at the most common type of fuel for your area. Though you may intend to purchase a gas furnace for it’s low initial and long-term costs, it might not be available where you live.

Life Expectancy

Regardless of fuel source, if you regularly maintain and properly monitor your furnace, you’ll likely avoid unnecessary service costs and ensure that it lasts as long as possible. For the average gas furnace, that can be as long as 20 to 25 years. For oil burning and propane furnaces, around 16 to 20 years is the range in which you’ll likely begin to notice a drop in efficiency or increase in maintenance costs.

When factored in with operating costs, oil and propane furnaces cost more and last for a shorter period of time. Unless natural gas isn’t available in your area, with high operating costs and shorter lifespan, propane is the choice with the lowest return on investment, though oil closely follows.


An important part and deciding factor when purchasing a furnace is how it impacts the environment. Though neither of the three fuel sources can offer zero emissions or carbon content, it’s clear that natural gas offers the fewest. Natural gas is by far the cleanest burning fuel, followed by propane and oil respectively.

Although environmental friendliness is a concern for most homeowners when purchasing a new furnace, due to the reality of long-term and initial costs, many can’t afford to install the most eco-friendly units, such as an electric furnace which has no carbon content. Natural gas, however, is the common compromise—an affordable furnace with considerably cleaner burning fuel than oil or propane.


Much like the operating costs of a furnace, maintenance should be included in long-term costs to adjust accordingly—not all furnaces are built the same and some are easier to repair, clean and service than others.

Though a gas furnace has a long life expectancy comparatively speaking, it will likely need services performed within that time period. Similarly, with a multitude of controls and igniters, replacements may need to be made over its lifetime.

Unlike a gas furnace, however, little maintenance is needed for oil and propane furnaces, though they’ll still benefit from annual cleaning and servicing and regular changing of the air filter.

House Size

Depending on your location and house size, heating requirements will differ from home to home. Regional temperatures are an important factor when determining which fuel source to burn and the United States, in particular, is home to a wide variety of different climates.

For most homeowners, natural gas is the obvious choice when deciding which furnace to install, but it’s particularly useful for large homes in colder climates due to the low fuel costs. Oil isn’t far behind, though it’s much less common than gas, as most homes are already equipped with natural gas furnaces.

Propane is much different than oil and gas, however. Though it burns quickly, offering heat fast, it costs nearly twice as much as gas and oil. For those living in small homes in already warm climates, this may be an alternative to natural gas, especially if it’s not available in the area. For those in larger homes with cold temperatures where the furnace will be in high demand, a propane furnace is not recommended as it can quickly become quite expensive to operate.

Which One Is Right For You?

Before deciding on which furnace is right for your home, consider the important differences between each fuel type and how it can heat your house.

Though natural gas furnaces are an all-around better value and more common unit, not everyone has access to natural gas. If you do, however, gas is not only the economic choice for particularly large houses in cold climates, it’s also the more eco-friendly.

If you don’t have access to natural gas, you may first want to consider an oil burning furnace. An oil furnace is most similar to a natural gas furnace in terms of cost, though they will be slightly higher, especially when installing.

Propane furnaces are by far the most expensive to operate, but also don’t offer much in the way of a lower initial price and installation. With fuel costs that nearly double that of a gas furnace, operating costs can quickly compound and essentially break the bank. The advantage to propane, however, is that it burns quickly. If you’re heating a small house in a climate that won’t require your furnace to run long, propane may be the right choice, especially without access to natural gas.

Consider these factors when purchasing or upgrading your furnace to best suit your needs. Armed with the knowledge to get the best value and efficient furnace for the cost, you’ll be sure to walk away with a unit that not only heats your home comfortably but saves you money, too.

Written by

Rene has worked 10 years in the HVAC field and now is the Senior Comfort Specialist for PICKHVAC. He holds an HVAC associate degree from Lone Star College and EPA & R-410A Certifications.

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