Calculating The Math Behind Converting From Oil Heat to Gas Heat

When The Wife and I bought our home almost a year ago we knew that one of the first projects we wanted to do was converting from oil heat to gas heat.  I thought this project would be a few years out but after receiving my 2nd $400+ Bill in the month of December I knew it was about time to get some quotes.

Calculating How Much I was Going to Save When Switching From Oil to Gas Heat

I wanted to know exactly how long it was going to take me to make my money back on actually converting my home from oil heat to gas heat.  First thing I did was contact my oil company to get an idea of how much oil I used in a year.  That number was about 1,000 gallons.  My contract price for the year was $3.59.  As such, I paid approximately $3,590 in oil costs for the year!

Next I called the gas company to find out if I am burning 1,000 gallons of oil how much therm will I use of gas.  They told me the conversion was a factor of 1.18.  So it is estimated that I will use 1,180 gas measured in therms.  Next we have to multiple that for the cost of my gas which the natural gas company told me would be about $1.30/therm.  This leads me to a total yearly cost of $1,534! WOW.

So I figure I am going to save about $2,000/yr (see additional considerations below) by switching, so all I have to do is compare that to the cost of the actual conversion.  Thus far I have received three quotes, $4,600, $6,800 and $9,400!  Talk about wild swings, right?  The $9,400 guy was a joke, he was clearly not a worker and was pure salesman.  He added all sorts of charges on his estimates that I didn’t ask for; when questioned he basically saw that we were pricing the job out and bailed.  So ignoring that guy we are looking at a cross over between 2 years and 3.5 years.

Other Factors to Consider When Converting from Oil to Gas

I thought of a few other factors (both good and bad) that should be considered when decided to convert:

  1. The gas company who wants me to convert so I am a customer could be underestimating my yearly cost.  This is very possible.
  2. It just seems likely that oil will continue to get more expensive per gallon due to a political pressures and a dwindling supply (supposedly).  Natural gas on the other hand seems to be dropping in price since apparently the U.S. is sitting on tons of it.
  3. I will be getting a new burner 83 to 85% efficient burner versus the 15 to 20 year old burner that is currently my basement, as such, the numbers actually could look better (maybe that’ll offset consideration number 1).
  4. I may have to have additional work done to the basement.  For some reason my home has gas hot water and cooking but the piping used for that is smaller than what is needed for heat.  Part of my ceiling is going to have to be removed and eventually replaced.  This may leave a small portion of our drop down ceiling removed until we redo the basement which may be a year or so away.

We are in contract until February 18th anyway (with a $600 ETF) so nothing is going to be done then, but I would love to hear from people who have completed this type of project:

  • Do my numbers seem correct?
  • Are there any other considerations I should consider?

8 Responses to Calculating The Math Behind Converting From Oil Heat to Gas Heat

  1. I have gas heat and hot water and cooking here in nyc and pay about each month. This is an attached house 18×35. Gas is cleaner ,keeping the chimney clear and better for breathing.

    • Yeah, I know I need to do it. Waiting until I am out of contract w/ the oil company so I don’t get hit with a massive ETF.

  2. Would you get any sort of credit from your utility company for upgrading to a more efficient model too? That could help with the consideration. Natural gas is so much cleaner, and since you already have the gas lines, it makes perfect sense to switch. My aunt and uncle don’t have gas lines to their house yet (line runs down street but not to house) and so upgrading from heating oil would cost them a heck of a lot more unfortunately so I think they’re sticking with heating oil for time being.

    • Yes those numbers had the rebate built in. I get it in the form of a gift card which I would turn around and prepay another bill as not to waste it.

  3. You may also be able to get the energy efficiency tax credit from the federal government. Last year I got 10% of the cost back for getting my house insulated. Couldn’t take advantage for installing AC though.

  4. Wow! that’s an amazing projected difference. Your winter bills are even higher than our exorbitant summer bills.

    The gauge of the gas pipes matters. You may want to talk with a knowledgeable plumber in this regard. Here at the Funny Farm, I had gas piped in to the stove; the house already had a gas water heater and was plumbed for a gas pack HVAC system. In the previous house, built by the same developer and still equipped with the gas heater, a plumber had reported that the piping would too small to allow adding another appliance. Fortunately, a previous owner in my present house had switched over to a heat pump, which runs on electric, and that allowed us to connect the stove to the existing gas lines.

    Cost-wise, the only thing comparable I’ve done to my house was to take out the accursed grass lawn (the water bills were HIGHER than the summer power bills!) and replace it with desert landscaping. This is a similarly expensive procedure. But the savings were so worth it! If you plan to stay in your house more than just a few years, you’ll probably be glad you made the change.

    • “I’ve done to my house was to take out the accursed grass lawn (the water bills were HIGHER than the summer power bills!) and replace it with desert landscaping.”

      WHY?! Isn’t it just ripping it all up and putting down some gravel?

      “Wow! that’s an amazing projected difference. Your winter bills are even higher than our exorbitant summer bills.”
      - This may be because I have a small child so The Wife insists it has to be warmer than I would probably keep it at. Another reason could be is that the equipment I have is pretty old.

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