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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 Maryland compare?

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—is 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 Maryland

2002 — 2011
Heating Fuel Average Cost Per Year*
Oil $1,491
Natural gas $1,526
Propane $2,176
Electricity $3,083
What the numbers tell us

Heating oil has been significantly more cost-effective than electric heat and propane and slightly less expensive than 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.

*Includes surcharges of 25 cents per therm and flat $13 per month customer charge for natural gas, and 2 cents per kilowatt hour delivery charge and flat $7 per month customer charge for electricity.

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