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Understanding common heating fuels and their costs

  • How are heating fuels different from one another?
  • How do world supplies and events affect various fuel sources?
  • How do heating fuel prices in North Carolina compare to one another?

Here are some answers to these important questions:

A brief look at heating oil, natural gas, propane and electricity
Heating oil. Most U.S. heating oil comes from Canada, the Virgin Islands and Venezuela. It is an extremely safe fuel, noncombustible unless heated to very high temperatures. (In fact, a lit match will not ignite a container of oil.) An exciting development in heating oil technology is the blending of biofuels with traditional heating oil, which will supplement supply and is expected to lower costs.

Natural gas is a combustible mixture of hydrocarbon gases. While natural gas is composed primarily of methane (a greenhouse gas), it can also contain ethane, propane, butane and pentane. Difficulties in transporting natural gas—because existing pipelines are near capacity—are increasing pressure to build new pipelines, despite the negative impact on the environment.

Propane is a by-product of natural gas and fuel oil. About 90% of U.S. propane is domestically produced; most of the remainder comes from Canada. Propane prices tend to track natural gas and oil prices.

Electricity is generated in electric utilities’ power plants using other sources of energy, such as coal. Electricity is considered an inefficient fuel because of all the energy expended to produce it and distribute it via power lines to users.

Heating fuel cost comparisons in North Carolina

Below you will find the average cost to heat a home in North Carolina over the past eight years.

Heating Fuel Average Cost per Year*
Heating Oil $1,316
Natural Gas $1,314
Propane $1,837
Electricity $2,296
What the Numbers Tell Us

Heating oil has been significantly more cost-effective than electric heat and propane and virtually the same as natural gas. That’s why the Consumer Energy Council of America says that it makes no economic sense to switch heating fuels – because homeowners are likely to lose money during the conversion process and they will not recoup any savings from a different fuel source. For a detailed breakdown of the costs associated with switching fuels, visit our Costs to Convert page.

* Annual expenses based on a specific formula that calculated average usage for each fuel and incorporated Btu content per unit of fuel. Also includes current surcharges of $10 a month for natural gas and $7.87 a month for electricity.

Sources: Energy Information Administration weekly heating oil and propane prices for North Carolina, monthly price of natural gas delivered to residential consumers in North Carolina, and average retail price of electricity to ultimate consumers in North Carolina.

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