Cost to Convert an Oil Furnace to Natural Gas?

Over the years, your favorite Genie has found that spring is often the time many people look at what they spent on heating oil over the winter and think about saving money by converting to a different type of heating, like converting an oil furnace to natural gas. If you are one of them, and find yourself thinking about replacing your existing oil-burning heating system, it’s a good idea to take some time to compare the cost and benefits of your options.


Let’s see what others are using to heat their homes. Here’s the Genies-eye view of home heating fuel users in the U.S. About half of the country uses natural gas and about 8% uses heating oil. For the rest, electricity accounts for 34% and propane for around 6%. Typically, those choices are driven by what’s available locally. The vast majority of heating oil users are concentrated in the Northeast, where they account for about 31% of residential heating systems. That’s largely because home heating oil was the cheapest option back when many of those homes were built. And for some it still is.


Since so many are using it, converting to natural gas heating is probably your first thought. Of course, the first thing you’ll want to do when deciding whether switching to natural gas is the right move for you is to find out if it’s available to you in your neighborhood. While both oil and gas are certainly effective in heating your home, each has its own benefits and differences.


First of all, home heating oil burns very efficiently. Modern oil-burning systems can have efficiency ratings around 90% which means only about 10% of the energy used in you system is lost in the process. The higher the rating, the greater the amount of heat for the amount of energy used. And that gives you a good return on each unit of energy. In addition, home heating oil provides more BTUs than other heating sources. That means more heat than an equivalent amount of other fuel. Also, oil furnaces are easily maintained by qualified HVAC technician. And when an older oil furnace needs to be replaced, doing so is a fairly simple and affordable process; whereas the cost to convert to a different type of energy can be very costly. Additionally, newer oilheat systems are far more efficient than those installed a generation ago. It rarely makes sense to replace an oil furnace that is working well with a gas furnace or other type of heating system.

Many people are surprised to learn that oil heat is just as eco-friendly as gas! It’s CO and NOx emissions are comparable to gas; however, oil does not carry any risk of methane release, as gas does. Methane is especially damaging to the earth’s ozone layer.           


Natural gas is also a good heating source…if it is available in your location. While it is widely available, there are still many areas where it is not an option. An advantage of natural gas is that it recently has cost less than heating oil. How much less can vary greatly depending on fluctuations in the oil and gas markets. With lower oil prices recently, the cost difference has shrunk considerably. Natural gas furnaces also have good efficiency ratings, up to 97% in some cases. But the cost of the furnace also rises significantly with the efficiency rating, and the cost to pipe natural gas to the home can be extremely expensive. Natural gas furnaces require very little maintenance with fewer components to maintain. However, like any heating system, they still need servicing. Lastly, gas is piped into the house, so there no deliveries to schedule. But again, the cost to connect a home to a gas line can run into the thousands.


According to Bob Vila of This Old House, “The first thing to look at when shopping for a furnace is the efficiency rating, commonly called Annual Fuel Utilization Efficiency (AFUE). The rating measures the efficiency of a machine’s combustion, where a higher rating signals a higher efficiency.”

Typically, new oil furnaces have AFUE ratings between 80% and 90%, while natural gas furnaces have ratings between 89% and 98%. Yes, gas furnaces are more efficient, but they are also more expensive, up to 25% more. Additionally, oil generates more heat per unit than natural gas. Here it’s important to know that all new furnaces are substantially more efficient than their counterparts made ten or more years ago. (Your Genie has seen a lot of improvements over the years!)

Convert or Not

Should you convert? Here’s Genie’s thought-for-the-day: if you have a perfectly good oil heating system there’s no need to replace it. Why put yourself through the expense and inconvenience of having a whole new heating system installed?

Other things to consider are:

  • How long will it take to recover installation costs with savings on fuel? (It may take many years.)
  • How will the recovery time be affected by fluctuations in fuel prices?
  • Do you trust your utility providing natural gas?
  • Are you happy with your heating oil supplier? (Genie sure hopes so!)
  • What do efficiency ratings really mean to you in costs?

Whether you decide to stick with home heating oil or switch to natural gas or some other fuel source, if you are going to replace your home heating system use a qualified and reputable HVAC contractor and get several estimates before you make any major investment in your home. Check them out carefully!

Still have questions? You can click the Contact Us page and submit your question or call and leave us a message. The Aladdin office staff is multi-talented (and very busy), but we promise to return your call as soon as possible. Either way, our response time is impeccable. Genie runs a tight… carpet!