Should You Switch from Oil to Natural Gas Heat?

(2010 Update: See how we saved on oil consumption year by year.)  

     Oil or gas heat? That is the question we have been pondering for a while now, especially with oil prices so high. So, when we got a flier recently from PSE&G, our local utility, encouraging us to call them for a free estimate on converting to gas, we decided to take them up on the offer. For us, it doesn't pay to change. Here's why.

    I should start by saying that we decided a few years ago to replace our 80-year-old coal-burning furnace, that at some point in the distant past was converted to oil, with a newer, more efficient model.  (We affectionately called the old unit Frosty because it was covered with white asbestos and reminded our then 5-year-old daughter of a snowman!) The new furnace, which cost about $6,500 in 2002, cut our oil use by more than half—from about 1,600 gallons a winter to 750. (At the current price of about $2.60 a gallon, that's a seasonal savings of roughly $2,200—not bad!)

    It seemed like a really good decision at the time.  In retrospect, we should have looked into converting to gas then—the investment might have paid off if we converted in 2002, applied the $6,500 we paid for the new oil furnace to a new gas unit, and then stayed in our house for fifteen more years.

   We learned from Scott, PSE&G's very amiable and knowledgeable Replacement Service Representative, that to replace our oil furnace with a completely new gas-fired unit would cost about $12,000. That's $9,000 for the gas burning unit plus $1,500 for a chimney liner and $1,400-$1,500  to remove the 275 gallon oil tank from our basement. I asked if we could just leave the oil tank there since it's not visible from the finished part of the basement, but he said local codes required its removal.

    Scott told us that since our current furnace is only six years old and has a life expectancy of 15-20 years, we could replace the oil burner assembly on the furnace with a gas burner for a cost of about $4,000. The boiler unit itself, the metering, and all the safety equipment could stay in place. That beats the $9,000 a completely new gas-burner unit would cost. But we'd still need to pay the $1,400-$1,500 to remove the old oil tank and $1,500 for the chimney liner, bringing the total conversion cost today to around $7,000.

Timing Is Everything

    Scott offered other insights. He suggested we ask ourselves why we're considering converting to gas heat, and pointed out that time may not be on our side. Our current plan is to stay in our house around seven more years, until our daughter goes to college.  At today's prices for heating oil and natural gas, we wouldn't even begin to see a return on our investment for about 10 years.

    For one thing, today oil and gas are roughly the equivalent price for the same amount of heat value. Actually, oil is a little more. Based on the current price of natural gas, a break-even price for heating oil is around $2.20 per gallon. (See this PSE&G Web site for a handy conversion table.) Today heating oil is close to $2.50, so it's a bit more expensive. 

    Sure, we'd pocket some money if we converted to gas. At today's prices, we'd save about $158.00 this year. Assuming the price spread between gas and oil stayed the same, at today's rate, it would take us close to 50 years to pay for the conversion work!! Now, it's unlikely the oil/gas price ratio will be static—but even if heating oil goes to $4.00 per gallon (possible—even probable, since it was $4.20 per gallon in the Northeast at its peak last winter) and gas stays at its current price, our annual savings would be about $950 per year and it would take us about eight years to pay for our furnace conversion—just about the time we're thinking of moving!

    After some investigation, I'm not saying a household shouldn't switch from oil to gas. But it's clear that there are many factors to consider. Once the recession if over, heating oil prices may rise more sharply than gas and the economics for conversion may improve. (see EM article: Why is Heating Oil More Expensive Than Gasoline?)

    Also on the plus side of conversion, moving to gas could make your house more attractive to potential buyers.  You might absorb the cost of the conversion or actually profit from it when you sell.

    Time value of money is another benefit of gas. With oil, your distributor may fill your tank near the end of the heating season. If a cold spell comes along, you'll be grateful. But, if the weather is mild, you could end up sitting on a full tank of heating oil for six months. At $2.60, a 275-gallon tank can tie up about $700 all summer and into the fall. That's not great for your cash flow!

Comments

[Tank Games]

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[flash game index]

I dont think you need the aluminium sheet, you are not triyng to transmit the heat through to water for example or in the case of the sola can items into the air flow inside the can tube, you are just tring to radiate it back into the air. If the foam can take the temperature, I think it should work equally as well if the foam is painted black, the surface should shed the heat back into the air as it passes over the black surface.
+1

[Kader]

Request the bill of sale for the "new" eingne. Unless it came from Chrysler as a crate eingne, it isn't factory-brand new.If the eingne was completely re-built by a trusted eingne re-building shop, it will get better fuel economy than a brand new one from Chrysler. Every part inside a crate eingne from Chrysler is manufactured by the lowest bidder. Chrysler makes the block but nearly all the moving parts inside are furnished by outside suppliers. If the motor was re-built and sold through an auto-parts store it is far from brand new! If this was the case, the eingne is loaded with low dollar parts and nothing was done to measure, machine or hand fit anything.Fuel economy comes from carefully selected pistons and rings and a cylinder hone hone job as per the piston ring manufacturer. The rods, (even if they're brand new) should be re-conditioned. The block decks should be trued-up parallel with the center-line of the crankshaft. The rotating assembly should be balanced. Every bearing should be hand fitted.Small eingnes in big old fat heavy cars don't get as good fuel economy as a light car with a bigger eingne. Your 2000 Jeep Wrangler will never get 28 mpg on trips as will a brand new 430 hp. Grand Sport Corvette.

[Harry]

I'm sure they will be monitored clloesy, but I think we are misunderstanding each other. The environmental impact of drilling will endure for centuries while the economic benefit will be short term. Aside from ecological concerns, there is another matter that should concern us, politics aside. This has for all practical history been called an oil reserve. I'm in the camp that believes we have eclipsed the , but that prediction has been wrong many times before. At any rate, I can't see it being practical to dip into the reserves if we haven't made a good faith effort toward reducing consumption and alternative sources of energy first.

[Iskohi]

As long as it's just the furnace you are reacpling, you should not have to. It may be more cost-effective to do it now, as R-22 is being phased out, so you may need to upgrade to a R-410 (the new refrigerant)if your A/C unit needs repairs it's illegal to add R-22 to a system now (2010 phase-out). It will be cheaper to do it now while the equipment stack is already being pulled apart and the installers are already there, and you'll get a better deal from your dealer when you package it all. FYI, you won't just replace the compressor. The indoor coil, outdoor unit (fan/housing/compressor/etc), and line-set (refrigerant lines) will all need to be replaced. The new refrigerant operates at a different pressure and requires differently sized pipe.

[Shiraz]

i installed raniadt baseboard heaters in my house. they work well and were cheap. i think they cost a little more than a gas furnace but the initial cost is much less. i found them at some surplus website, plus i bought some used ones off ebay. they run on 220 and are permanent, not a space heater. i put thermostats on each of them.

[Kgaugelo]

Hey, I have been meandering your solar hetear videos and was wondering what your most efficient version is as of yet. Which one moves the most heat into your house or shop. You make great readings of temperature but you haven't mentioned your fan speeds, CFM (unless I missed it). I was looking for a new project and you definitely made up my mind! Thanks for the upload!

[Okhan]

We just had an oil tank inspection done on a porrepty we made an offer on. The home was built in the 1940 s and has had one or two owners since then. The report came back negative, but how can that be? There's was no city report that a tank was decommissioned. Should I get a second opinion?

[Janaina]

Propane is exnpvsiee but nice. Electricity can be exnpvsiee but if your power goes out you're up a creek. Wood, if you have access to a good economical supply can be good but it is dirty, sooty and can be smelly, but if it's good wood it is worth all that. But for convienience and cost, zoned electric is the best and if the power goes out you fire up the generator!

[Mallam]

I disagree, Its all in the way the heetar is built and made. I've been doing this for many years and the use of fiberglass house insulations is the best way to go with a heetar off the house. The lighter the aluminum the better the heetar performs. My 4 8 heetars have performed great at temps of 130 Plus and this was 0-5 deg outside temps. And this is using a car hvac blower motor. Ideally you want to be down around 110 blowing in with adjustable fan rates.

[Maria]

I dont think you need the aluminium sheet, you are not triyng to transmit the heat through to water for example or in the case of the sola can items into the air flow inside the can tube, you are just tring to radiate it back into the air. If the foam can take the temperature, I think it should work equally as well if the foam is painted black, the surface should shed the heat back into the air as it passes over the black surface.

[Cathy]

Good on yer Rich, I was pretty happy when I loeggd into you tube and saw you had posted a new video. You have motivated me back to the hobby of my younger years, dirt cheap solar stuff After a few decades working as a tradesman installing and servicing commercial solar water heaters I am fully into the KISS (keep it simple stupid) approach. The more complicated the design the more that goes wrong is my experience I made a video today and I'm waiting for it to upload, I'll send you a link!

[Kenneth]

Well, that's just it, according to the poeuirvs owner there is another variable for the forced air furnace two different burn cycles. If it kicks on to the higher burn cycle like it would in the morning when it goes from 64 to 71 for example it would use the higher cycle which is less efficient than keeping it at 71 all night using the low burn cycle. That's how he explained it anyway.

[Samir]

If you have vents you can install a rlugear forced air central air system.If you don't have the vents you can install one of the ductless inverter systems from Sanyo or Mitsubishi. They don't require any ductwork and minimal space. They're basically a heat pump so you can get heating and air conditioning. One unit will heat/cool up to four rooms.They're used throughout Europe and the Middle East. They're very efficient and quiet although they are a little pricey. Guess that's the price you pay for a system that doesn't require duct work.

[Zella]

Dear Henry,Thank you for your post and your questions. There are some spaceil considerations to remember when dealing with the newer, higher SEER equipment. I assume that they are referring to the fact that most of the higher SEER pieces of equipment have a variable speed fan. Zoning can work fine with this application. You just need to make sure you set the maximum cfm (fan speed) back to as low as possible while still maintaining good airflow. We recommend the ideal setting to be at 400 cfm/ton. The lower setting will help with the fan wanting to ramp up while still allowing the equipment to ramp up slowly and idle back when all zones are satisfied. A barometric bypass damper will work just fine with most two-position zone dampers and panels. (3) or (4) zone systems work great as long as you install a bypass damper to help with the higher static pressure as zone dampers close. In fact, we sell a great, reliable zone panel that can do up to (6) zones right out of the box! We recommend a barometric bypass damper with two-position dampers. The modulating bypass dampers are too slow to react to the two-position or spring-return dampers. The modulating bypass dampers work best with modulating zone dampers. Please have your contractor contact us for help with their design. Thanks again for your interest and your questions. Please contact us with any further questions.Thanks,Kurt WesslingJackson Systems, LLC

[Logan]

The ductless syestm would be great, but they cost $$$ to buy and install. If you're not using the room frequently, your payback on the ductless syestm won't be worth it.The space heater you describe would do a fine job as long as you remembered to turn it on well in advance. They take a while to get going before they even start heating the room.If the gas fireplace is functional and safe, it would probably be the best choice for intermittent heating. It'll start cranking out the heat as soon as you turn it on and should warm up the room quickly. If the fireplace hasn't been used in a while, I'd strongly suggest getting it checked out before firing it up.

[Road Worthy Certificate Melbourne]

This is the only time I've been to your website. Thank you for posting more information.

[Darryl Iorio]

Both oil and gas can power a furnace well. Either can work efficiently, depending on the type of furnace. It is also practical to consider replacing the furnace if the conversion will cost as much as purchasing a new furnace.

[Mechteld Abelli]

Why don't you buy a brand new furnace? I think that will be much more efficient in your case, as your oil furnace looks quite old. Well, if it has a sentimental value, then you can keep it, or you can convert into a gas furnace. Either way, the decision is yours.

[Anca]

A few years ago I'd have to pay someone for this informtaion.