What’s the difference between Natural Gas and Propane?
One of the first Questions we’ll ask you about your home when you call for a consultation is if you have natural gas on the street. If you do, you have one of the best values in energy today; we can hang a box on your wall that satisfies your need for energy that costs between $8,000 and $12,000, and makes use of a 100% domestically produced fuel with arguably better environmental characteristics, and all at an equivalent of $2.00 a gallon oil. Because of the technology available to us today, burning gas in the home is upwards of 95% efficient, which is quite remarkable.
The same boiler using Propane, costs the equivalent of $4.00 a gallon oil. Why is that?
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 our Propane comes from Crude Oil than from Natural Gas, and it’s cost tracks Oil, not Natural Gas.
Cost of Propane.
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 it’s overall environmental costs are a mixture of Crude Oil, and, to a lesser extent, Natural Gas.
The big problem with Propane is it’s cost when using Propane as a heating fuel. In Maine, Propane currently costs $3.04 per gallon (based on the Maine Office of Energy Independence July 2011) 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. When you correct for that, Propane 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. On the downside, when you add it up, the efficiency gain of Propane doesn’t make up for the cost premium of the fuel making Natural Gas a better solution.
There are certain applications where Propane is a viable back up fuel, particularly where either the load of a building has been reduced by insulation, wood or pellet fuel, solar, or a combination, and the Propane boiler is essentially serving a back up function. Most houses, when thinking about which fuel to switch to, won’t do well with propane unless there is a wood or pellet stove in the mix. No one likes to spend $10,000 on a boiler and still not save money!
Understanding the benefits and limitations of Propane, Natural Gas, Oil, or Wood can be frustrating. Let our experts help you decide what is the most cost effective as well as environmentally sound solution for your home heating needs. Contact us today to set up a Free Consultation.