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How To Compare Fuel Costs Of Various Fuels

Let's imagine a homeowner that has just added on an addition to their home or have finished off their basement. How should this new space be heated ? Maybe the existing furnace is not sized large enough or it's too difficult to install baseboard heaters or vents in the new room. What other methods can be used to heat this new room ? Is it cheaper to heat with propane or wood pellets ? How does a wood stove compare to electric heat ?

Comparing fuel costs between different fuels can be a little tricky. The difficulty lies in the fact that the price consumers pay is not consistent between fuels. Fuel oil and propane are usually purchased by the gallon. Natural gas is purchased by volume (ccf or mcf). Wood is purchased by the cord. Wood pellets are purchased by the bag or ton. Electricity is purchased by the kWh.

We need to way to standardize the costs between the different fuels sources. The way we do this is to compare the costs/BTU. The BTU or British Thermal Unit is a measure of the amount of heat a product can produce. By determining the BTU's of each type of fuel source we have a means to compare costs.

Let's look at electric heat as an example. Electric heat contains 3340 BTU/KWH. If you pay 14 cents/kWh then electric heat costs .0000419 $/BTU. Most fuel cost comparisons are based on the cost/million BTU. So the cost for electric heat is .9/MBTU

Now let's take a look at fuel oil. #2 fuel contains 138,800 BTU/gal. If you are paying /gallon then it appears fuel oil is .40/MBTU. However oil furnaces have a typical efficiency of 80%. By factoring in the efficiency the cost will rise to /MBTU.

From these two examples you can see that using fuel oil costs less than half the cost of using electri cheat. What happens if fuel oil rises to .50/gallon or /gallon ? The benefits become less.

Here are the BTU conversions for the major fuel sources.

Fuel Oil - 138,800 BTU/gal
Electricity - 3340 BTU/KWH
Wood Pellets - 16.4 million BTU/ton
Firewood - 20 million BTU/cord
Propane - 91,200 BTU/gallon
Natural Gas - 1.03 million BTU/1000cf

Let's do another example propane assuming the cost is
(.25/91,200)*1,000,000= .70/MBTU

If we assume the burner operates at 80% efficiency then the cost becomes
.70/.80 = .13/MBTU

How about wood pellets @ 0/ton ?
(0/16.4) = .19/MBTU at 80% efficiency =

Convenience needs to be factored in as well. It's pretty easy to plug in an electric space heater or install some electric baseboard heat. It's also a lot easier to turn a thermostat for a fuel oil furnace than to go out the wood pile for your wood stove.

About the Author: To learn more about pellet stoves or compare fuels
costs with an interactive calculator visit

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