Heat pump vs propane furnace: the running cost is not close

The short answer

Against propane, the arithmetic is one sided. A heat pump delivers heat more cheaply in 47 of 51 states, with 2 too close to call and 2 where propane wins.

The reason is not the heat pump. It is propane. A gallon of propane holds 91,500 BTU, and at a national reference price of $2.90 per gallon that works out to roughly $0.1138 per kilowatt hour of delivered heat after a 95% furnace. Natural gas in most states delivers the same heat for less than half that.

How the comparison actually works

Every heating system is a machine for turning purchased energy into heat in your house. The only question that matters for running cost is how many dollars it takes to put one kilowatt hour of heat into the room.

A combustion appliance burns fuel and loses some of it up the flue. Its AFUE rating is the share that reaches the house, so an appliance rated 95% delivers 95 cents of heat for every dollar of fuel. It can never exceed 100%.

A heat pump does not make heat. It moves heat that already exists in the outdoor air into the house, and the electricity it consumes runs the compressor doing the moving. Because it is moving rather than making, it can deliver three or four units of heat per unit of electricity. That ratio is the coefficient of performance.

Nothing else enters the arithmetic. Not the size of the house, not the length of the winter, not the national average. Those change how much heat you need, and they cancel out of the comparison because both machines have to deliver the same amount.

This site rates the heat pump at HSPF2 11.0, a good cold climate unit, and then knocks it down for backup heat. HSPF2 divided by 3.41214 gives a raw COP of 3.22. Assuming 10% of the season's heat comes from electric resistance strips running at COP 1.0 brings the effective figure to 2.64. That is the number used on every page here.

What it costs per unit of heat in every state

EIA publishes residential propane by PADD region rather than by state, so each state below carries the most specific regional figure EIA reports for it. The spread is wide: New England runs well above the Midwest. Replace it with what your supplier actually charges on the calculator.

Electricity is the 2025-12, 2026-01, 2026-02 heating season mean from EIA. Propane at the EIA heating season mean for each state's PADD region, 91,500 BTU per gallon, through a 95% AFUE furnace.

Why propane costs so much more to burn

Natural gas arrives through a pipe that was paid for decades ago. Propane arrives on a truck.

That difference shows up in three places. The commodity itself is a refinery product with different economics from pipeline methane. Delivery is a physical logistics operation with a driver, a vehicle, and a schedule. And storage is your problem, which means a tank, its rental or purchase, and periodic inspection.

The energy content works against propane too. A gallon of propane holds 91,500 BTU. A therm of natural gas holds 100,000. So you buy propane in a smaller unit at a higher price per unit, and the gap per unit of energy is larger than the sticker prices suggest.

None of that is a criticism of propane. For a house with no gas main, it is a reasonable fuel. It is simply expensive per unit of heat, which is what makes the heat pump comparison so lopsided.

What would change this answer

Three inputs move this comparison, and only one of them is on the equipment label.

• Your actual fuel price. Propane pricing varies more than any other heating fuel, because it depends on your supplier, your contract, your tank size, and how far the truck drives. Swings of a dollar a gallon between neighbours are ordinary. The figure here is a national reference point, not your price.
• Backup heat. Resistance strips run at COP 1.0. Fifteen percent of the season's heat from the strips costs 27% of your effective efficiency, which is enough to change the verdict in a marginal state. See the field note.
• The heat pump itself. A builder grade unit at HSPF2 8.0 has a COP of 2.34 against 3.22 for a cold climate machine, moving the breakeven from 2.78 to 2.18.

How this was checked

Fuel prices are pulled from the EIA public API and averaged over the most recent complete December to February window, using identical months for every state. Summer months are excluded deliberately. EIA's residential price is total revenue divided by total volume, and in summer the fixed monthly customer charge is divided by almost no gas, which inflates the apparent price by up to 114%. That error is documented in the corrections log.

The same rate file drives the calculator, every state page, and every table on this page, so the tool and the writing cannot disagree. Unit conversions were derived twice, once in dollars per unit of chemical energy and once in dollars per delivered BTU, and both give the same threshold.

No verdict is declared inside a 10% margin, because fuel prices move more than that between seasons.

What this page does not cover

Running cost only. This page says nothing about what the equipment costs to buy or install, what rebates or tax credits are available, what financing costs, or what either system does to your emissions.

It also ignores the largest single item in the capital comparison: a heat pump is also an air conditioner. If you would otherwise be buying a furnace and an air conditioner, you are buying one machine instead of two, and that can outweigh several years of running cost difference.

State averages hide real variation between utilities inside a state. If you have your own bills, put your own numbers into the calculator rather than trusting a state mean.

References

1. U.S. Energy Information Administration, Electricity Data Browser, residential retail price by state.
2. U.S. Energy Information Administration, Weekly Heating Oil and Propane Prices.
3. AHRI Standard 210/240-2023, Performance Rating of Unitary Air-Conditioning and Air-Source Heat Pump Equipment.