What is the difference between natural gas, oil and propane heating

Natural gas comes out of the ground as a mixture of methane, propane and other hydrocarbons. A small amount of propane is generated from natural gas production, but most propane comes about through the distillation of crude oil into fuels. When a refinery refines crude oil, it will determine, based on the quality of the crude and market demands, how much of each kind of fuel to produce. The same refinery can produce diesel fuel, propane, and jet fuel. About 5% of natural gas production is propane, and about 3% of crude oil comes out as propane. More of the propane comes from crude oil than from natural gas.

Propane is a domestically produced fossil fuel, to the extent that our refineries use domestic crude oil. It also burns cleaner at the home than oil, but its overall environmental costs are a mixture of crude oil and to a lesser extent natural gas.

The big problem with propane is its cost when using it as a heating fuel. In Maine, propane currently costs $3.04 per gallon while heating oil costs $3.66. Propane in this case sounds like the lower cost solution until you realize that there are fewer BTU’s per gallon in propane than oil causing propane to costs 26% more than oil.

Installing a new propane boiler will cost a little bit more than installing a new oil boiler. However, the propane boiler will burn between 10 and 20% more efficiently than the oil boiler. The efficiency gain of propane doesn’t make up for the cost premium of the fuel making natural gas a better solution.