Recommended Home Heating Systems for the Northeastern U.S.

Natural Gas

• Heating with natural gas is by far the least expensive option for new homes in the northeastern U.S. The furnace costs are comparable, but as of 2012, you would pay less than half for natural gas compared to oil. This cost advantage makes natural gas heating attractive for older homes with oil furnaces. When the oil furnace has to be replaced, it makes sense to switch to natural gas. Even when you don't need a new furnace, if your heating costs are high because you live in a cold part of the northeast, replacing your heating system with a high-efficiency gas furnace may save you money in the longer term.

Oil

• Some areas don't have natural gas available and have to use other sources of heat. Oil is the recommended alternative from a fuel-cost point of view, if electricity costs are high. Propane is another alternative. It burns more cleanly than oil but costs about the same. To cut down on fuel costs, you can supplement oil heat with a wood-burning stove or propane fireplace that delivers the heat directly to your living area.

Electric

• Electricity rates vary widely, and electric heat installation costs do as well. A central electric forced-air furnace has a cost comparable to an oil or gas furnace, but electricity may be less expensive than oil, depending on local rates. Installing baseboard heaters is less expensive than a central furnace as long as you don't have to change your electricity panel because electric heat needs more power. Electric heating may be the recommended alternative to oil for your home, but you have to check with your utility company as to how much the electricity will cost.

Heat Pump

• A heat pump is less expensive to operate than a gas furnace, but it is much more expensive to install. You may be able to justify the extra cost because the heat pump is more environmentally friendly, and because it delivers air conditioning as well as heating. Winter temperatures in the northeastern U.S. sometimes are too cold for a heat pump, and these systems need backup heating for cold periods, usually with electric heating coils in the pump, or with another system to provide heat. Ground-source heat pumps, which pump heat out of the ground through shallow wells or loops of buried pipe, don't need backup heating, but are even more expensive to install.