How Much Will You Spend On Heating Fuel During The Ownership Of Your Home?
Benjamin Franklin famously claimed that nothing in this world is certain except for death and taxes. That may have been true in his day, but as any homeowner can attest today: we can now add utility bills to that shortlist of certainties. According to US News and World Report, the average homeowner should reserve up to 10% of their budget to spend on electricity, water, heating, and cooling. What many people don’t know when they’re buying their first home is just how much of that utility budget will be going towards keeping you and your family warm through the winter.
The US Energy and Information Agency reports that space heating and water heating make up over two-thirds of home energy consumption in the United States, and upwards of 42% of the average utility bill. That means that oftentimes, the bulk of homeowner’s utility bills will go directly into the furnace during the wintertime. In this post, we’ll estimate how much you might spend on heating fuel during the ownership of your home, then talk about measures you can take to bring that cost down.
How much are you spending on home energy costs?
Just how much money you’ll spend on home heating depends on a number of factors. Your home’s square footage, space height, number of windows and exterior doors, and insulation are huge elements, but perhaps the biggest difference-maker is your heating fuel source. According to the National Association of Realtors, the average American homeowner stays in their house for eight years.
The federal symbol of energy efficiency, Energy Star claims that the average homeowner spends over $2,000 a year on all utility bills combined, including water, electricity, heating, and cooling, meaning in the best case scenario homeowners will spend upwards of $16,000 on utilities during their ownership. That said, homeowners fortunate enough to live in places with long winters can expect to pay more than twice that amount in the cold months alone just to keep the house warm. That’s why we’ll use data specific to the Northeast to calculate how much you can expect to pay to heat your home.
Fuel Oil Furnace Lifetime Costs
The New York/New Jersey utility company PSEG estimates that a 2,000 square foot home with adequate insulation will spend more than $5,300 on fuel oil alone. To make matters worse, most fuel oil furnaces operate at only 65% efficiency. That means that 35% of your utility bill literally goes up in smoke! On top of that, oil burns dirty, which is not only bad for the environment, it’s also bad for your bottom line: regular maintenance and expensive service contracts are musts if you want to keep your heat going throughout the winter. That means adding another $300-$500 bill to your heating costs annually.
The good news about oil is that for all its inefficiencies, old school, cast iron boilers and furnaces can last for upwards of forty years with proper maintenance. Factoring in the cost of oil and your service contract: a homeowner with an oil furnace can expect to burn through anywhere from $44,400 to $46,400 over an eight-year home ownership period.
Propane Furnace Lifetime Costs
Contrast that to a home that’s heated with a furnace that burns propane. A new, well-functioning propane furnace will burn cleaner and more efficiently than fuel oil. Using PSEG’s model, that same home that was spending over $5,300 on fuel oil would spend a little more than $3,100 on propane, saving them nearly $2,000 a year on heating costs. Much of that cost difference comes from efficiency, the average propane furnace is around 80% efficient, with some newer, high-efficiency models attaining upwards of 98% efficiency.
While that’s a great value compared to the cost of oil, heating with propane also means installing unsightly gas tanks outside your home that take up yard space and can blunt your home’s curb appeal. Homeowners looking to make the switch should also know that a new, high-efficiency propane furnace will set you back anywhere from $3,000-$6,000. Just like oil, propane is delivered by a local contractor who will likely impose a fee of anywhere from $200-$500 a year to service your furnace or boiler and deliver propane to your home. That means that if you were to buy a home with a propane furnace, you’d burn through $26,400 to $28,800 over eight years and if you were to upgrade your home to propane you’d spend anywhere from $29,400 to $34,800.
Natural Gas Furnace Lifetime Costs
The other common option that burns fossil fuel is by far and away the most common: natural gas. There’s a reason that three out of five homes in New York State and 49% of all buildings in the United States are heated by natural gas. It’s affordable, efficient, and burns much cleaner than other fossil fuel sources. Unlike oil and propane, which is delivered by local providers when you need a refill, natural gas is piped into your home by a utility company, so you’ll never have to worry about running out. Just like propane, new high-efficiency natural gas furnaces can boast up to 98% efficiency, which helps deliver serious savings while shrinking your home’s environmental impact.
Again, using PSEG’s model for that same 2,000 square foot home, you’d be looking at a heating cost of a little over $1,700 a year with natural gas. That said, the utility company that delivers that gas to your home will charge you a delivery fee that can be anywhere from $200-$500 a year. Homeowners looking to upgrade to gas can add at least another $2,000-$6,500 to install a new furnace and potentially thousands more to pay the utility company to bring the gas line to you. Even so, that’s still a world of savings compared to fuel oil and almost half the cost of propane.
A home with natural gas already installed will end up costing the homeowner somewhere between $15,200 to $17,600. If you’re looking to save by upgrading to gas heat that means you should expect to pay anywhere from $17,200 to $24,100 over your ownership.
Start saving when you upgrade your home’s existing equipment
While utility bills themselves may be unavoidable, there are a number of things homeowners can do to reduce their burden. The EPA estimates that proper insulation can save you upwards of 15% on heating and cooling costs. On top of that, new smart thermostats can help operate your boiler or furnace more efficiently, and many utility companies provide incentives and discounts for homeowners to adopt them. Ultimately, the best way to reduce your utility bill is to install a geothermal system.
A Dandelion Geothermal System heats and cools using the ambient temperature of the ground under your home and operates at upwards of 400% efficiency without burning any fossil fuels. Not only is it good for the environment, but it also saves you money by eliminating your separate heating bill while providing warmth in the winter and super-efficient central AC in the summer. You can install a Dandelion system for no money down and finance for as little as $140/month, meaning that you could spend as little as $14,400 over the lifetime of the system while adding value to your home.