This page presents a chart of heating oil and natural gas price(s) that have been normalized to $/Therm
An article with an exhaustive explanation is provided in the links at the bottom of the page. (Cost Comparison: Gas vs Oil vs Electricity Parts 1-3)You may have heard anecdotal tales of why oil is better than gas. One misconception I have personally heard is that oil heats better, oil has more energy, or oil burns hotter. Indeed, every energy source has a BTU value, hard woods burn very hot in a fireplace or wood burning stove. Here is an interesting chart of the various firewood btu values
While it is true that oil does have a high BTU value, we need to compare its equivalence by normalizing the price. In other words, finding the common denominator. For example, oil is sold by the gallon, natural gas is sold to us retail based on the therms we use. Therms are just an energy value, just like BTUs, so we can normalize the price of gas and oil to therms. I could likewise have normalized to BTUs. But therms are a better measure because the unit is quite large. So, our first conversion is an easy one:
1 Therm = 100,000 BTUs
In the above chart, I am pulling data from the natural gas and heating oil futures market on a daily basis.
Market Prices
Natural Gas Futures Price
Home Heating Oil Futures Price
Note that, on the futures market, gas is sold by the millions of BTUs and heating oil is sold by the gallon. You may notice that the price of a gallon of oil on the futures market is much cheaper than you would pay retail. Well, it's wholesale after all. I'd like to get a gallon of oil at that price, but I would need a couple of thousand gallon tanks in my backyard ;)
The BTUs in a gallon of heating oil can be found at Michigan State U
#2 Heating Oil = 138,500 BTUs/gal
Adding it all up in a simple formula
So let's try a real world example. Let's fetch today's retail price for heating oil at www.cashheatingoil.com
Today's price (06/22/2015) is $2.15 per gallon
So the Price of Oil, normalized to therms is $1.55 per therm
So now on to price of Natural Gas per therm.
We can get the retail price of natural gas from the National Grid website National Grid LI Gas Delivery Rates
Which, for the Month of June is $0.34 per Therm. This is a good baseline price, because in reality we pay our monthly gas bill much like electric rates.
Here you can see that we are charged at 3 different rates; First 3 therms, Next 47, and the rest of our usage
I have demonstrated that Natural Gas is significantly cheaper than oil on the basis of $ per energy unit, in his case therms.
How about a real world example
So let's say I use an entire 250 gal tank of oil per month, hypothetically for January.
That would work out to 138,500 BTU/gal x 250 gallons = 34,625,000 BTUs
$250 gallons of oil at $2.15 is $537
That same 34 million BTUs converted to gas is:
34,625,000 BTUs x 1 Therm / 100,000 BTU = 346.25 Therms
Based on the National Grid Residential Rates
First 3 Therms: $17.66
Next 47 Therms: ($0.6320/therm) 47x.632 = $29.70
Excess 500 Therms: ($0.15/therm) (346.25 -50) x 0.15 = $44.44
Which doesn't include fees and charges which can be approximated from the National Grid website
Delivery Rate Adjustment: $0.0567 x 346.2 = $19.63
System Benefits Charge: $0.0207 x 346.2 = $7.17
Gas Supply: 346.25 x $0.36 = $124.65
The same 346.25 Therms at Natural Gas rates is: $17.66+ $29.70 + $44.44 + $19.63 + 7.17+ $124.65 = $243.24
That is less than half the price of oil heat.
How to calculate price difference between oil and gas
Cost Comparison: Gas vs. Oil vs. Electricity, Part 1 Published: June 22, 2013Cost Comparison: Gas vs. Oil vs. Electricity, Part 2
Cost Comparison: Gas vs. Oil vs. Electricity, Part 3
US EIA: Fuel Cost Spreadsheet
General news about home heating
Home heating oil is now cheap, but natural gas is even cheaper Published: Dec 30, 2014