Propane, Electricity, or Oil – Which one is cheaper?
I recently received the first full month electric bill for our new home here in the NC mountains and was shocked: $420.00! That is the most expensive electric bill I have ever had. Granted, my new house is all electric, where my prior homes were both electric and gas.
To get a comparison to our previous house in Charlotte I looked up the electric bill for last year and added on the gas bill. Electric bill: $184.33 + gas bill: $111.00 = $295.33. That’s an increase of $125.00. While the $420.00 electric bill looked pretty high, comparing it to my prior electric+gas bill didn’t make it seem as bad as I thought. The additional $125.00 is easily explained due to the colder temperatures here in the mountains, along with the fact that we’re using a number of supplemental heaters. The supplemental heaters are used to heat the upstairs area and basement as they aren’t heated by central heat. This is something high on our list of items to fix, but until we sell our other home in Charlotte, we’re holding off.
Price of Propane, Electricity, and Oil
Given the additional cost though, it did make me wonder if having a full electric house was the most cost effective option. I created a quick little spreadsheet to do some comparing and pulled up Google and started researching a bit.
In order to compare the three, I had to get the details on prices along with a basis on how much energy is produced by each option.
Propane is a liquid and thus purchased by the gallon. Propane produces 93,000 BTUs (British Thermal Units) per gallon. Propane based appliances are generally 85% efficient, thus the net BTUs produced is 79,050 BTUs.
Cost for propane varies significantly depending on where you live, but my current supplier is charging $2.79/gallon.
Electricity is sold by the kilowatt hour (KWH). Electricity produces 3,412 BTUs per KWH. Electrical appliences are 100% efficient at converting electricity to heat and thus the net BTUs produced is 3,412 BTUs.
Cost for electricity also varies significantly depending on where you live and who your provider is. In my area, electrical power is 10.06 cents/KWH This is just below the national average of 10.68 cents/KWH.
Like propane, oil is a liquid and thus sold by the gallon. Number 2 heating oil produces 123,000 140,000 BTUs per gallon. Oil appliances are generally 85% efficient, resulting in a net BTU of 104,550 119,000 BTUs per gallon.
Oil costs also vary based on area. In my area, oil is currently about $2.87 per gallon.
Comparing Propane, Electricity and Oil
When comparing the three sources of energy, a million BTUs is generally used. Using the numbers above, here is how the three options compare:
Propane: $35.29 per 1 million BTUs
Electricity: $31.06 per 1 million BTUs
Oil: $24.12 per 1 million BTUs
As you can clearly see, oil is the least expensive option for me based on where I love. Using oil would save me on average about $46 per month or $552.00 per year. While not a significant savings, it’s not an amount of money to turn my back on either.
I made a few quick calls to various HVAC companies in my area. While the estimates varied, it would cost me approximately $3,000 – $5,000 to convert from electric to oil based heat. Using $4000.00 as the median, it would take me a little over 7 less than 4 years to begin to recover the cost of switching to oil based heat.
Staying with Electricity
7 years is a long time to, and I’m concerned that the cost of oil isn’t going to go down, but will continue to increase, most likely far more rapidly than propane or electricity. Thus making the 4 year mark even longer.
I am also concerned about the environmental impact of using oil, even though it’s currently a less expensive option. I just don’t really feel comfortable contributing to continuing the use of oil as an energy source.
Calculating which is cheaper for you
If you’re interested in calculating which is the cheaper option for you, I’ve created a Google docs spreadsheet you can use. Just export it to whatever format you prefer and enter your own cost numbers.
Given the choice I have and the comparison I’ve provided what would you do if you were in my shoes? Any perspectives on environmental impact of propane, electricity and oil?
Photo by: AdriÃ garcÃa