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.
Propane offers better value than oil, but it comes with trade-offs. Heating with propane requires installing large gas tanks outside your home. These tanks take up yard space and can hurt your home’s curb appeal. A new high-efficiency propane furnace costs between $3,000 and $6,000. Like oil, propane is delivered by a local contractor. Most charge $200–$500 a year to service your furnace or boiler and deliver propane. If you buy a home with a propane furnace, you’ll spend $26,400 to $28,800 over eight years. If you upgrade your home to propane, your costs will range 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. Oil and propane are delivered by local providers when you need a refill. Natural gas, however, is piped directly into your home by a utility company. That means you never have to worry about running out. Like propane, new high-efficiency natural gas furnaces can reach up to 98% efficiency. This level of performance delivers serious savings while also reducing your home’s environmental impact.
Using PSEG’s model for a 2,000-square-foot home, heating with natural gas costs a little over $1,700 a year. The utility company that delivers the gas will also charge a delivery fee of $200–$500 annually. Homeowners upgrading to gas must add at least $2,000–$6,500 for a new furnace. They may also need to pay the utility company thousands more to bring the gas line to their home. 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 steady temperature of the ground beneath your home. It operates at upwards of 400% efficiency without burning fossil fuels. The system is good for the environment and saves you money. It eliminates your separate heating bill while providing warmth in the winter. It also delivers super-efficient central AC in the summer.
