Home / Blog / Cost Comparison: Gas vs. Oil vs. Electricity, Part 1

Cost Comparison: Gas vs. Oil vs. Electricity, Part 1

June 22, 2013 | Posted by Mitt Jones

Deciding whether or not to switch to a different type of heating can be daunting, to be sure. The topic is too big to fell in one short blog, but we can at least get a good start on it by taking on the cost comparison.

One challenge in comparing the cost of heating with gas, oil, and electricity is that each is sold in much different units. Natural gas is often billed by the therm, while heating oil is sold by the gallon. Electricity is metered by kilowatt-hour, or KWH.  Our old friend from across the pond—the British thermal unit, or BTU—gives us a unit we can easily use for our comparison.

Specifically, let’s begin by pricing each fuel per 100,000 BTU of energy.

With natural gas, the conversion is easy: One therm equals 100,000 BTU, and a good going rate is about $1.10 per therm. So:

Cost of natural gas = $1.10 for 100,000 BTU

Now, for heating oil: Let’s say we buy our heating oil for $3.50 a gallon. Heating oil is rated at about 140,000 BTU per gallon. So,

Cost of heating oil per 100,000 BTU = $3.50 per gallon * 100,000 BTU / 140,000 BTU per gallon

Cost of heating oil = $2.50 for 100,000 BTU

Finally, let’s turn to electricity. Let’s say one KWH costs $0.10. One KWH equals 3,413 BTU, so to calculate the price of 100,000 BTU, we use this equation:

Cost of electricity per 100,000 BTU = $0.10 per KWH * 100,000 BTU / 3,413 BTU per KWH

Cost of electricity = $2.93 for 100,000 BTU

At first glance, it looks like gas is the most economical choice followed by oil and then electricity. Of course, it’s not quite that easy. Differences in efficiency give some types of electrical heating an edge. To see how, continue on with Part 2 or cut to the chase with Part 3.

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