5 Cost-Effective Ways to Heat Your Home (Based on 2015-16 Residential Fuel Price Forecasts)

by | BiggerPockets.com

There are a number of available options when it comes to heating your home. Some offer monetary savings, and others are appealing due to their convenience. However, trying to determine which option is the most cost effective for you can be frustrating, and solutions will vary depending on your location and the current market prices.

So what’s best way to heat your house? Here is information for the five ways to heat your home, based on 2015 to 2016 residential fuel price forecasts, to help you answer that question.

Natural Gas

Natural gas is the main source of heating fuel for all U.S. regions except the South. Natural gas is considered a clean, environmentally benign fuel that contains fewer impurities and results in less pollution.

About 90 percent of all natural gas is delivered as useful energy, making it a highly efficient fuel, as compared to electricity, which utilizes only about 30 percent.

Unit cost: $10.21 per CuFt

Annual winter expenditure: $578.00

Popularity: About 49 percent of the U.S. population uses natural gas to heat their homes.



Electricity is most popular in the Southern region of the United States. It is available in many forms, from whole house heating units to baseboard and space heaters. Because of its generation and transmission loss, though, it can be one of the more expensive ways to heat your home.

When using electric heat, a heat pump can give you more efficient use of the electricity and cut usage by as much as 50 percent — though this may not be as significant in Southern and Western states.

Unit cost: $.12 per KWH

Annual winter expenditure: $930.00

Popularity: About 39 percent of the U.S. population uses electricity to heat their home.


Heating oil is used more in the Northeast region of the United States and is debatably one of the more expensive heating options. This could be due to that fact that these systems have a long life span — as much as 30 years or more if properly maintained — and many existing systems are not as efficient the newer units.

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Oil is a clean, renewable resource that with current technology, burns cleanly, producing almost zero emissions. Oil is also considered a safe fuel source with an ignition point of 140 degrees, making the danger of explosion unlikely.

Unit cost: $2.80 per gallon

Annual winter expenditure: $1,392.00

Popularity: About five percent of the U.S. population uses oil to heat their home.


Propane is most popular in the Midwest region of the United States. It’s a safe, nontoxic fuel that will not contaminate soil or groundwater and is delivered from either a surface or underground tank that sits on your property. You can purchase your own tank or rent one from the fuel company.

Propane will vary in cost, depending on demand and availability but can be put on a pre-paid autofill schedule to help alleviate winter price increases.

Unit cost:  $1.83 per gallon

Annual winter expenditure: $1,437.00

Popularity: About four percent of the U.S. population uses propane to heat their home.



With the growing popularity of homesteading and the desire to find more sustainable energy solutions, wood has seen a 33 percent usage increase since 2005.

While wood appears to be one of the least expensive options, there may be other considerations. Many insurance companies increase prices for homes that have wood stoves or fireplaces.

One option to help stave off these higher premiums could be an outdoor wood-fired boiler. Outdoor wood-fired boilers work with your existing duct system, but because they are outside, they aren’t considered a fire hazard like an indoor stove.

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Unit cost: $230 per cord to purchase — free if you live in an area where you can cut your own wood.

Annual winter expenditure: Varies, depending on the system and whether you purchase or cut your wood.

Popularity: Approximately two percent of the U.S population uses wood as their primary heat source, and eight percent use it as a secondary source to heat their home.

There are many factors that go into choosing the best heating option for you. Your location, your existing system, and the availability of each fuel type are all determining factors when making your decision. A heat and air professional can help determine your options and make sure you have all the information you need to make the best choice for your specific needs.

What heating options have you found to be best for your home or rental?

Leave your comments below!

About Author

Anum Yoon

Anum Yoon is the founder and editor of the millennial money blog, Current on Currency.


  1. Roy N.

    Even better than selecting a heating option is building, or renovating, to be energy efficient. It is possible, with off the shelf materials, to build 2000 ft^2 home which will use < $500 – $600 of energy per year (not just heat, but all energy).

  2. Andrew Syrios

    And of course there’s always insulation that can help with all of this. It doesn’t surprise me oil is so much more expensive. I hadn’t seen those numbers, but that’s certainly the vibe I’ve gotten especially comparing it to electric and natural gas.

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