Comparison of Natural Gas Vs Propane Costs

Natural Gas

• Natural gas is sold on a cost per therm basis for residential use. Residents and homeowners use natural gas as fuel for a wide variety of home appliances, and to keep homes warm or cool through HVAC systems (heating, ventilation, air conditioning). The gas is supplied to homes through extensive pipelines operated by major gas utility companies. Costs vary for natural gas, based on market prices and use. When the use is high, such as in the winter months, gas prices generally rise. The opposite takes place during summer when people switch over to using more electric energy to operate air conditioners.

Propane

• Propane gas is derived from natural gas during refinement processes. So, in a way, propane is a "daughter" of natural gas. Like natural gas, prices for propane gas fluctuate, based on use and market prices. Propane might cost $2 per gallon one day, and $1.75 the next day. People who use propane as an alternative to natural gas have tanks on the property of their homes to store the propane gas. The tanks can hold as much as 1,000 gallons of propane.

Natural Gas -- Home Energy Cost Example

• To compare costs for natural gas, let's use the same 2,000 square foot home, requiring 100 million BTUs of energy per year. One therm of natural gas contains 100,000 BTUs. This means the home would require 10,000 therms of natural gas for the year. If the cost per therm were 70 cents, the natural gas energy bill for the year would be $700.

Propane -- Home Energy Cost Example

• Here's an example of what it would cost to heat a 2,000 square foot home with propane for a year. That size home would require about 100 million BTUs of energy for heating the air for warmth and water for bathing, and to provide fuel for cooking and doing laundry. Propane is sold in one gallon units, and each gallon of propane contains 91,547 BTUs. It would take 1,093 gallons of propane to generate the 100 million BTUs. If the cost per gallon were $1, it would cost $1,073 to take care of the energy costs for the year.

Cost Comparison Cautions

• In the home energy example, natural gas would cost about 35 percent less than propane. However, prices per therm of natural gas and per gallon of propane vary from state-to-state and season-to-season. Check rates in your area. A switch to one or the other might help lower your home energy costs.