If a delivery truck fills your tank every winter, you already know the drill: you don’t find out what heating season will really cost until the invoices start arriving. Homes that heat with propane or heating oil pay some of the highest costs per unit of heat in the country, and unlike natural gas customers, they also carry delivery scheduling, tank monitoring, and the occasional panic call in a January cold snap. Every fall, a wave of propane and oil households asks the same question: would a heat pump actually be cheaper?
The honest answer is: usually yes, often dramatically — but it depends on three numbers you can look up tonight. This guide walks you through the exact math (cost per million BTU), the three realistic ways to make the switch, and how to decide between a full heat pump conversion, a dual fuel setup that keeps your existing furnace as backup, and a mini split that simply takes over most of the load. No sales fog — just the arithmetic, the same way we laid it out in our dual fuel cost-math guide.
Table of Contents
- Why propane and oil homes feel energy prices first
- The only number that matters: cost per million BTU
- A worked example: propane vs. oil vs. heat pump
- “But does a heat pump work when it’s really cold?”
- Option 1: Full heat pump replacement
- Option 2: Dual fuel — keep the tank as your backup
- Option 3: Mini splits for partial displacement
- Practical considerations before you switch
- Incentives in 2026: what’s left
- The bottom line
Why Propane and Oil Homes Feel Energy Prices First
Roughly one in ten U.S. homes heats with a delivered fuel — propane or heating oil — mostly in rural areas and the Northeast where natural gas lines never arrived. Delivered fuels have two structural disadvantages. First, you pay retail plus logistics: the cost of trucking fuel to your driveway is baked into every gallon, and prices swing with crude oil, export demand, and regional supply in ways you can’t control. Second, you pay in lumps. A tank fill in the middle of a cold stretch can run many hundreds of dollars at the exact moment your budget is tightest.
Electricity isn’t immune to price increases — nobody’s utility bill is — but electric rates are regulated, move slowly, and don’t require a truck. More importantly, a heat pump doesn’t make heat the way a furnace burns fuel to make it; it moves heat from outdoor air into your home. That’s why a heat pump routinely delivers two to four units of heat for every one unit of electricity it consumes, while even the best furnace can never deliver more than one unit of heat per unit of fuel. That multiplier — the coefficient of performance, or COP — is the entire reason this comparison is worth running.
The Only Number That Matters: Cost per Million BTU
Furnaces are priced in gallons, heat pumps in kilowatt-hours, and natural gas in therms — which makes comparing them feel impossible. The fix is to convert everything to the same unit: dollars per million BTU of delivered heat. Three standard energy-content figures make this possible:
- Propane contains about 91,500 BTU per gallon
- Heating oil (No. 2) contains about 138,500 BTU per gallon
- Electricity contains 3,412 BTU per kilowatt-hour
But raw energy content isn’t delivered heat — you have to account for efficiency. A furnace’s AFUE rating tells you how much of the fuel’s energy actually reaches your living space (an older oil boiler might be 80% efficient; a modern condensing propane furnace can exceed 95%). For a heat pump, the multiplier works in your favor: a seasonal COP of 3 means you get 3 × 3,412 = about 10,200 BTU of heat per kilowatt-hour.
Here are the formulas, ready for the back of an envelope:
- Propane: (price per gallon ÷ 0.0915 ÷ AFUE) = $ per million BTU
- Heating oil: (price per gallon ÷ 0.1385 ÷ AFUE) = $ per million BTU
- Heat pump: (price per kWh ÷ 0.003412 ÷ COP) = $ per million BTU
Pull your actual delivered price from last winter’s invoices and your electric rate from your utility bill (use the full per-kWh price including delivery charges, not just the supply rate). Those two documents are all you need.
A Worked Example: Propane vs. Oil vs. Heat Pump
These are illustration prices to show the method — plug in your own numbers, because delivered-fuel prices vary enormously by region and contract.
Say your propane came to $3.00 per gallon delivered last winter, burned in a 95% AFUE furnace: $3.00 ÷ 0.0915 ÷ 0.95 ≈ $34.50 per million BTU.
Say a neighbor pays $3.50 per gallon for heating oil in an 85% efficient boiler: $3.50 ÷ 0.1385 ÷ 0.85 ≈ $29.70 per million BTU.
Now a heat pump at an electric rate of $0.17 per kWh. At a seasonal COP of 3 (typical for a modern inverter heat pump across a full winter in much of the country): $0.17 ÷ 0.003412 ÷ 3 ≈ $16.60 per million BTU. Even if you assume a conservative COP of 2 — representing colder climates or an entry-level unit — you get about $24.90 per million BTU, still cheaper than either delivered fuel in this example.
That’s the pattern we see over and over when customers run their real numbers: against propane, a heat pump frequently cuts the cost of heat roughly in half; against oil, the margin is usually thinner but still meaningful. The exceptions are real, though — if you enjoy unusually cheap fuel contracts or face very high electric rates, the math can narrow or even flip. That’s why you run it with your invoices, not someone else’s averages. And if this winter trends cold, delivered fuels tend to feel it hardest — see our breakdown of what the El Niño winter outlook means for heating bills.
“But Does a Heat Pump Work When It’s Really Cold?”
This is the question every propane and oil homeowner asks, and it’s a fair one — the reputation heat pumps earned in the 1980s died hard. Modern inverter-driven, cold-climate heat pumps are a different machine. Variable-speed compressors with enhanced vapor injection maintain strong heating capacity well below freezing, and many cold-climate models continue producing useful heat at sub-zero temperatures. We covered the engineering in depth in our cold-climate heat pump guide, including the concept that matters most: the balance point — the outdoor temperature below which the heat pump alone can no longer keep up and backup heat steps in.
Two things follow from that. First, COP falls as the outdoor temperature drops, which is why we used a range in the math above rather than a single rosy number. Second, every heat pump system in a cold climate needs a backup plan — electric heat strips, or your existing furnace in a dual fuel arrangement. If you’ve ever wondered what the “AUX HEAT” light on a thermostat means, our auxiliary vs. emergency heat explainer walks through it.
Option 1: Full Heat Pump Replacement
The cleanest conversion: retire the propane or oil appliance entirely and install a ducted heat pump system — outdoor unit plus air handler with electric heat strips for backup. This suits homes with existing ductwork, moderate-to-cold climates (with a cold-climate-rated unit where winters are serious), and owners who want to cancel fuel deliveries for good. The tank can eventually come out of the yard, and in summer you get high-efficiency central air conditioning from the same equipment — a genuine upgrade if you’ve been limping along with window units.
Sizing matters more with heat pumps than with oversized furnaces, because the unit should be selected against your home’s actual heating load, not guesswork. Start with our free HVAC system sizing tool, and read our Goodman heat pump guide for how the efficiency tiers break down. Buy Comfort Direct carries full ducted heat pump systems from Goodman, Daikin, and Solace — browse the complete lineup in our heat pump category.
Option 2: Dual Fuel — Keep the Tank as Your Backup
If ripping out a working propane furnace feels wasteful, don’t. A dual fuel system pairs a heat pump with your existing (or a new) fuel-burning furnace, and the controls automatically run whichever heat source is cheaper at the current outdoor temperature. Above the switchover point, the heat pump carries the house at its lower cost per BTU; below it, the furnace takes over with full fossil-fuel firepower. You keep the security blanket of a fuel-fired backup for the deepest cold and power-grid worries, while the heat pump quietly handles the 80–90% of winter hours that are merely chilly rather than brutal.
For propane and oil homes specifically, dual fuel is often the sweet spot: the expensive fuel becomes a backup you sip instead of a primary you gulp. One tank fill can stretch across a whole season. Our complete dual fuel guide covers switchover temperatures, thermostat requirements, and the cost math in detail.
Option 3: Mini Splits for Partial Displacement
Heating with an oil boiler and radiators — no ducts at all? You don’t need a whole-house conversion to start saving. A ductless mini split (or two) installed in the main living areas can displace the majority of your fuel consumption, because most of a home’s heating hours happen in the spaces you actually occupy. The boiler stays in place for bedrooms, bathrooms, and the coldest nights; the mini split does the cheap everyday work. This “partial displacement” approach is one of the most cost-effective first steps for oil-heated homes in the Northeast, and it adds zoned summer cooling as a bonus.
For handy homeowners, MrCool DIY mini splits with pre-charged line sets make this achievable without hiring out the refrigerant work — see our MrCool DIY mini split guide. Prefer a pro install? Daikin’s ductless lineup is among the most respected in the industry. And for ducted homes that want DIY-friendly central equipment, the MrCool Universal series splits the difference.
Practical Considerations Before You Switch
Your electrical panel
A ducted heat pump with electric backup strips is a meaningful electrical load. Many homes handle it fine on a 200-amp service; some older homes on 100-amp service need a panel evaluation first. Dual fuel setups and mini splits are gentler on the panel because the backup heat isn’t electric. Have an electrician confirm capacity before you order equipment — it’s a cheap conversation that prevents expensive surprises.
Ductwork
Heat pumps move larger volumes of slightly-cooler air than a furnace blasting at full fire, so ducts sized for a furnace sometimes need attention. If your system has always struggled with airflow, address it during the conversion rather than after.
The tank
If you go full conversion, ask your fuel supplier about tank removal or buyout terms, and check whether you’re in a contract with minimum-gallon commitments. Dual fuel customers should tell their supplier consumption will drop, so automatic delivery schedules get adjusted and you’re not paying for fuel you no longer burn.
Refrigerant generation
New heat pumps now ship with the low-GWP refrigerant R-454B rather than R-410A. For a buyer, this mostly means one thing: you’re purchasing current-generation equipment that will be serviceable for decades, rather than closing out an old platform.
Incentives in 2026: What’s Left
Be careful with older articles promising federal tax credits: the federal 25C Energy Efficient Home Improvement Credit ended for equipment placed in service after December 31, 2025. That said, incentives haven’t vanished — many states and utilities still run their own heat pump rebate programs, and some state-administered home energy rebate programs remain active, with eligibility varying by state and income. Check your utility’s website and your state energy office before you buy, and see our rundown of what expired and what’s still available in 2026. The good news for the math above: it didn’t rely on any incentive at all. If a rebate applies, it just shortens the payback.
The Bottom Line
If you heat with propane, a heat pump is very likely to cut your cost per unit of heat substantially — in many homes, close to half. If you heat with oil, the savings are usually real but tighter, and the case strengthens every time you’re staring down a boiler repair or a tank replacement. Either way, the decision shouldn’t be made on vibes or on a contractor’s one-liner: pull last winter’s fuel invoices, find your electric rate, and run the cost-per-million-BTU math above. Twenty minutes with a calculator will tell you more than any ad.
When the numbers point to a switch, Buy Comfort Direct can help you do it at wholesale-direct pricing. We carry complete ducted heat pump systems, dual fuel pairings, and ductless mini splits from Goodman, Daikin, Solace, and MrCool — with free shipping on orders over $99, 0% APR financing through Affirm for qualified buyers, a price match guarantee, and open-box clearance deals if you’re hunting for extra value. Not sure what size or configuration your home needs? Use the sizing tool, or talk to a real person: call (877) 843-4822, email Info@BuyComfortDirect.com, or reach out through our contact page. This is the season to run the numbers — before the first delivery truck of winter backs into your driveway.