Heating Cost Blog
Heating is the single largest energy expense in most American homes, accounting for roughly 45% of total energy bills according to the EIA. With energy prices shifting year over year, the cheapest way to heat your home in 2026 depends on where you live, what fuel is available, and the efficiency of your equipment.
This guide compares every major heating fuel type on a level playing field: cost per million BTU delivered to your living space. That means we account for both fuel price and equipment efficiency, so you can make a true apples-to-apples comparison.
Before diving into the numbers, here is a quick overview of each fuel type and how it produces heat:
Different fuels are sold in different units — therms, gallons, kilowatt-hours, cords. The only fair way to compare them is to convert everything to a common unit: cost per million BTU of delivered heat.
This metric accounts for two things: (1) how much energy the fuel contains, and (2) how efficiently your equipment converts that fuel into heat. A furnace rated at 80% AFUE wastes 20% of the fuel's energy up the flue, so you pay for BTUs you never feel.
The table below uses national average residential fuel prices from the U.S. Energy Information Administration (EIA) and typical equipment efficiencies. Your actual costs will vary by state and equipment age.
| Fuel Type | Unit Price | BTU per Unit | Efficiency | Cost / Million BTU |
|---|---|---|---|---|
| Natural Gas | $1.10/therm | 100,000 | 92% | $11.96 |
| Heat Pump | $0.165/kWh | 3,412 | COP 3.0 | $16.12 |
| Cordwood | $300/cord | 20,000,000 | 75% | $20.00 |
| Wood Pellets | $280/ton | 16,500,000 | 83% | $20.44 |
| Propane | $2.60/gal | 91,500 | 90% | $31.56 |
| Heating Oil | $3.80/gal | 138,500 | 85% | $32.29 |
| Electric Resistance | $0.165/kWh | 3,412 | 100% | $48.35 |
Sources: U.S. Energy Information Administration (EIA) average residential prices; Pellet Fuels Institute; USDA cordwood surveys. Efficiency ratings reflect typical modern equipment.
At national average prices, natural gas is the cheapest heating fuel in 2026, followed by heat pumps (air-source), cordwood, and wood pellets. Electric resistance heating is by far the most expensive option.
National averages hide huge state-by-state differences. Enter your state to see real local energy prices.
Use the Free Calculator →The national averages above tell only part of the story. Fuel prices vary dramatically by state, and so does the ranking of cheapest to most expensive. Consider these examples:
Electricity is among the cheapest in the nation thanks to hydroelectric power — often under $0.12/kWh. Meanwhile, natural gas prices are above average because the region is far from major gas fields. Result: heat pumps often beat natural gas here, with costs around $11-12 per million BTU versus $13-14 for gas.
Electricity prices are the highest in the continental U.S. — $0.25 to $0.30/kWh. Natural gas is moderately priced, and heating oil is widely available. Result: natural gas is the clear winner where available. Heating oil costs roughly $30-35 per million BTU, while electric resistance can exceed $75 per million BTU.
Electricity is moderate ($0.13-$0.15/kWh), and mild winters mean heat pumps run at high efficiency. Natural gas is cheap where available. Result: heat pumps and natural gas are close, and heat pumps offer the added benefit of air conditioning in summer.
Natural gas is cheap ($0.80-$0.95/therm) because the region sits near major pipelines. Winters are harsh, reducing heat pump efficiency. Result: natural gas dominates at $9-11 per million BTU. Cold-climate heat pumps are competitive but still trail gas by 15-25%.
Natural gas is the most common heating fuel in the U.S., used by about 47% of households. It is cheap, convenient, and widely available in cities and suburbs. High-efficiency condensing furnaces (96% AFUE) squeeze almost every BTU out of the fuel. The main downside is that not every home has access to a gas line — extending one can cost thousands of dollars.
Air-source heat pumps are the most energy-efficient heating technology available to homeowners. A modern unit with a COP of 3.0 delivers three units of heat for every one unit of electricity consumed. That makes them two to three times cheaper to operate than electric resistance heating. In states with cheap electricity (under $0.14/kWh), they can undercut natural gas. The Inflation Reduction Act offers up to $8,000 in rebates for qualifying installations, improving the upfront economics even further.
If you live in a wooded area and can source firewood cheaply — or cut your own — cordwood can be the absolute cheapest heating option. At $200-$300 per cord, a modern EPA-certified wood stove delivers heat for $15-$20 per million BTU. The tradeoffs are significant, though: manual labor to split, stack, and load wood; particulate emissions; and the need to tend the fire. A cord of hardwood (oak, maple) contains roughly 20 million BTU.
Pellet stoves offer the low cost of biomass heating with more convenience than cordwood. The fuel is delivered in 40-pound bags, and the stove feeds itself automatically from a hopper. At $250-$300 per ton, pellets cost $18-$22 per million BTU delivered, making them competitive with natural gas in some markets. Availability can be inconsistent in some regions, and pellet prices spike during cold snaps.
Propane is the go-to fuel for rural homes without natural gas lines. Unfortunately, it is significantly more expensive — typically 2.5 to 3 times the cost per BTU of natural gas. At $2.50-$2.80 per gallon nationally, propane costs around $30-35 per million BTU. Prices also vary widely by region and are subject to winter spikes. If you heat with propane, a heat pump can often cut your costs in half.
Heating oil remains common in the Northeast, where roughly 4 million households still use it. At current prices of $3.50-$4.00 per gallon, it costs $30-34 per million BTU. Heating oil prices closely track global crude oil markets, making them volatile. Many oil-heated homes are excellent candidates for conversion to heat pumps or natural gas where available.
Baseboard heaters and electric furnaces convert electricity to heat at nearly 100% efficiency, but that still makes them the most expensive option in almost every state. At the national average of $0.165/kWh, electric resistance costs roughly $48 per million BTU — four times more than natural gas. The only scenario where electric resistance makes sense is in mild climates with very low electricity rates (under $0.08/kWh), which is uncommon. If you currently heat with electric resistance, switching to a heat pump is almost always a money-saving upgrade.
Our calculator uses your state's real energy prices to rank every heating option from cheapest to most expensive.
Try the Calculator →Regardless of which fuel you use, these steps reduce the amount of heat your home needs:
At 2026 national average prices, the ranking from cheapest to most expensive is:
But these rankings shift significantly by state. In the Pacific Northwest, heat pumps can claim the top spot. In the Northeast, heating oil and electric resistance are painfully expensive, making natural gas or a heat pump conversion the best path forward. In rural areas without gas lines, a heat pump or wood stove often beats propane.
The best way to know what is cheapest for your home is to plug in your state and home details. Our free heating cost calculator uses real EIA energy prices to give you a personalized cost comparison across all fuel types.
Enter your state and home size for a personalized comparison of all fuel types with real local prices.
Use the Calculator →