Heating oil and propane are the two dominant delivered fuels for homes without natural-gas service. They are sold the same way — by the gallon, delivered by truck, billed per fill-up — but the equipment, costs, and geographic fit are different enough that the choice usually comes down to what is already installed in the home.
How they stack up at a glance
| Factor | Heating Oil (#2) | Propane (LP-Gas) |
|---|---|---|
| Energy per gallon | ~138,500 BTU | ~91,500 BTU |
| CO₂ per million BTU | ~163 lb | ~139 lb |
| Typical equipment | Oil furnace or boiler | Gas furnace, boiler, or warm-air unit |
| Storage | Indoor or outdoor steel tank, owned | Above-ground or buried tank, often leased |
| Best fit | Older homes in the Northeast | Rural homes anywhere LP service runs |
| Other appliances served | Heat and hot water only | Heat, hot water, range, dryer, generator |
Energy density and operating cost
The single biggest difference is energy density. A gallon of #2 heating oil packs about 138,500 BTUs; a gallon of propane packs about 91,500 BTUs. To compare prices fairly, convert both to dollars per million BTU:
- Heating oil $/MMBTU = (price per gallon ÷ 138,500) × 1,000,000
- Propane $/MMBTU = (price per gallon ÷ 91,500) × 1,000,000
A propane gallon at $3.00 and a heating-oil gallon at $4.00 work out to roughly $32.79/MMBTU and $28.88/MMBTU respectively — heating oil is actually the cheaper energy source even though its sticker price per gallon is higher.
Modern condensing propane furnaces hit AFUE ratings in the mid-90s, while a typical oil burner runs in the mid-80s, which narrows the gap. Equipment efficiency is the second number to plug in alongside the fuel price.
Environmental and emissions
Burned for the same amount of heat, propane releases less carbon dioxide than #2 heating oil. The EIA carbon coefficients work out to roughly 139 lb of CO₂ per million BTU for propane versus about 163 lb for heating oil, so propane runs about 15% lower per unit of heat delivered. Propane also burns with very little soot or sulfur, while oil combustion produces more particulate and sulfur dioxide.
Two things narrow the gap on the oil side. Ultra-low-sulfur heating oil (ULSHO), capped at 15 ppm sulfur and now required across much of the Northeast, cuts oil's sulfur emissions sharply, and Bioheat blends (biodiesel mixed into the oil, commonly B5 to B20) lower its lifecycle carbon. Even so, propane still tends to leave less soot in the appliance and chimney, and the EPA recognizes propane as an approved clean alternative fuel under the Clean Air Act Amendments of 1990.
The fuels also differ in spill risk. Heating oil is a liquid: a failed tank or supply line can release oil into soil or groundwater and require environmental cleanup. Propane is stored under pressure and flashes to vapor if released, so a leak does not contaminate soil or water, though propane vapor is flammable and is regulated for that reason.
Equipment compatibility
Oil and propane equipment are not interchangeable. Oil burners atomize liquid fuel; propane burners mix vapor with combustion air through a gas valve. Switching fuels means replacing the appliance.
If you are remodeling or replacing a furnace anyway, that is the natural point to evaluate the switch. If your current oil-fired boiler still has a decade of service in it, the math rarely favors a forced conversion.
Tank ownership
Heating-oil tanks are almost always owned by the homeowner and filled by whichever supplier offers the best price that month. Propane tanks are more often leased from a single supplier, who is then the only company allowed to refill that tank. Owning your propane tank unlocks competitive bidding and is the lever that makes the propane market behave more like the heating-oil market.
Either way, the tank itself is a code-governed install — oil tanks under NFPA 31 and propane containers under NFPA 58 — so placement and clearances are set by the standard, not the supplier.
“This chapter shall apply to tanks used to store fuel oil for or to supply fuel oil to oil-burning appliances and equipment.”
NFPA 31, §7.1 (Tanks for Liquid Fuels — Scope; Standard for the Installation of Oil-Burning Equipment, 2024 ed.). View source
“Separation Distances Between Containers, Important Buildings, and Line of Adjoining Property That Can Be Built Upon.”
NFPA 58, §6.4.1.1, Table 6.4.1.1 (Container Separation Distances — LP-Gas Code, 2024 ed.). View source
Multi-fuel households
Many rural homes use both. A common setup is heating oil for the furnace and hot water (because the equipment was already there) and propane for the kitchen range, the clothes dryer, and a backup generator. Each fuel runs on its own tank and its own delivery cycle.
Which is right for your home?
- Stay with what is installed unless you are replacing the appliance anyway. Conversion costs usually exceed the per-BTU savings.
- Pick propane for new construction in rural areas, for homes that also want gas appliances, and where heating-oil dealers are scarce.
- Pick heating oil in dense Northeastern markets where competition among oil dealers keeps prices low, and where the home already has an oil-fired boiler with serviceable life left.
Use the directory to find local propane dealers and heating-oil dealers serving your ZIP, then run the cost-per-MMBTU math against your own current bill before making the call.
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Frequently asked questions
- Which delivers more heat per gallon, heating oil or propane?
- Heating oil delivers more heat per gallon. A gallon of #2 fuel oil contains about 138,500 BTUs, while a gallon of propane contains about 91,500 BTUs. That means a home burning heating oil consumes fewer gallons per heating season than the same home burning propane, even though propane equipment is often more efficient on a percentage basis.
- Is propane cheaper than heating oil?
- It depends on the regional fuel market and the time of year. Propane is often quoted at a lower price per gallon than heating oil, but because each gallon of propane carries about a third less energy, the cost per delivered BTU is what matters. Compare your local propane and heating-oil price per gallon, divide each by its BTU content (91,500 for propane, 138,500 for heating oil), and use the cost per million BTU to compare apples to apples.
- Can I use the same furnace for propane and heating oil?
- No. Propane furnaces and heating-oil furnaces use different burners, different fuel lines, and different ignition systems. Switching between fuels means replacing the appliance or, in some cases, swapping a dual-fuel-rated burner assembly. Plan on a full furnace or boiler replacement when converting between the two.
- What size propane tank do I need for whole-home heating?
- Most whole-home propane heating setups in cold climates use a 500-gallon or 1,000-gallon above-ground tank. A 500-gallon tank holds about 400 usable gallons (tanks are filled to roughly 80%) and supports a typical 2,000–2,500 sqft home through most of a New England winter between deliveries. Larger or less-insulated homes step up to 1,000 gallons.
- Is propane cleaner-burning than heating oil?
- Propane combustion produces fewer particulates and lower sulfur emissions than #2 heating oil, and the EPA classifies propane as a clean alternative fuel under the 1990 Clean Air Act. Modern ultra-low-sulfur heating oil (ULSHO) and B20 biofuel blends have closed much of the gap, but propane still tends to leave less soot in the appliance and chimney.