Choosing a Heating Fuel: Oil, Propane, Gas, or Heat Pump in NH

New Hampshire homes are heated with one of four main options: fuel oil, propane, natural gas, or electric heat pumps. Each has trade-offs in upfront installation cost, operating cost, fuel availability, and equipment lifespan. The right answer depends as much on your address as on your budget. Here is how the four options actually compare for a southern NH home.

At A.J. LeBlanc Heating, we install and service all four across Manchester, Bedford, Concord, Nashua, Salem, and Auburn.

Natural gas: lowest operating cost where available

Natural gas is typically the lowest-cost heating fuel in NH when it is available. Service is concentrated in larger municipalities (much of Manchester, Nashua, parts of Bedford, parts of Concord) and along utility distribution lines. Most rural and central NH towns have no natural gas service at all.

Upfront cost: moderate. Higher than oil or propane if a service line needs to be brought to the home from the street.
Operating cost: typically the lowest of the fossil-fuel options in NH.
Reliability: very high. Continuous utility supply, no on-site fuel storage to worry about.
BTU content: roughly 100,000 BTU per therm.

Propane: the most common option where natural gas is unavailable

Propane is delivered to an on-site tank (typically 500 or 1,000 gallons) by your propane supplier. Modern propane equipment reaches the same high efficiency as natural gas.

Upfront cost: moderate. Tank rental or purchase is part of the picture if you do not already have one.
Operating cost: typically higher than natural gas but competitive with oil depending on current pricing.
Reliability: good, but dependent on regular tank refills during cold snaps. Plan for the supplier's auto-fill program.
BTU content: roughly 91,500 BTU per gallon.

Oil: still common in central and rural NH

Fuel oil remains widely used in older NH homes and in areas without natural gas service. Stored in an on-site tank (indoor or outdoor), delivered by oil suppliers.

Upfront cost: often the lowest for a like-for-like replacement, especially when reusing existing tank and piping.
Operating cost: historically more volatile than gas or propane. Sometimes the cheapest, sometimes the most expensive.
BTU content: roughly 138,500 BTU per gallon, which is the highest of the common residential fuels.
Equipment: requires annual professional service to keep combustion clean.
Note: the higher BTU content per gallon often makes oil more cost-competitive than the per-gallon price alone suggests.

Heat pumps: increasingly the best long-term option in NH

Modern cold-climate heat pumps deliver useful heating down to outdoor temperatures well below zero. Because they move heat rather than producing it through combustion, they typically deliver 2 to 3 units of heat for every 1 unit of electricity consumed.

Upfront cost: moderate to higher, depending on whether ductwork already exists.
Operating cost: very competitive with natural gas in NH; typically lower than oil, propane, or electric resistance.
Bonus: provides air conditioning from the same equipment.
Best fit: homes converting from oil, propane, or electric resistance; homes that also want cooling; homes pursuing electrification and rebate eligibility.
Pairing: most NH heat pump installations include a backup heat source (fossil fuel furnace or boiler, electric strips) for the coldest stretches. This dual-fuel configuration typically produces the lowest year-round operating cost.

How to actually compare them

The right comparison is cost per million BTU of delivered heat, factoring in:

Current local fuel prices (NH Department of Energy publishes weekly figures)
Equipment efficiency (AFUE for fuel-burning, HSPF2 for heat pumps)
BTU content of the fuel

The same equipment can be the cheapest or most expensive to operate depending on the fuel price snapshot. We run the numbers with customers using current local prices, not industry averages, when comparing replacement options.

What rebates and tax credits do

Available incentives change the math meaningfully, and they change over time:

Federal tax credits: the federal 25C Energy Efficient Home Improvement Credit ended December 31, 2025 and is no longer available for new installations. See our post on the end of the 25C credit for what incentives remain.
NHSaves utility rebates: vary by program and household income. Income-eligible households may qualify for significantly higher incentives.

In 2026, NHSaves rebates and financing are the live levers. Program rules change. Confirm current eligibility before purchase.

Schedule a consultation

If you are facing furnace, boiler, or heat pump replacement and trying to decide which fuel makes sense for your NH home, contact A.J. LeBlanc Heating. We will run the numbers using your address, your current fuel, and current incentives. Serving New Hampshire families since 1928.

Frequently Asked Questions

Which heating fuel is cheapest in New Hampshire?

Where it is available, natural gas is usually the lowest-cost fuel. Cold-climate heat pumps are very competitive with natural gas in many NH homes once equipment efficiency is factored in. Oil and propane prices fluctuate.

Is propane more efficient than oil?

Modern propane furnaces and boilers reach higher AFUE ratings (95+ percent) than most oil equipment (87 to 90 percent). However, oil contains roughly 50 percent more BTUs per gallon than propane, so the per-gallon comparison is not the full picture. Run the math at current local prices.

Do heat pumps actually work in NH winters?

Yes. Modern cold-climate heat pumps deliver useful heating at outdoor temperatures down to minus 13°F and lower. Most NH installations include a backup heat source for the coldest stretches.

Can I just switch from oil to natural gas?

Only if natural gas is available at your address. Many NH neighborhoods have no service. Conversion involves the utility bringing a service line to the home plus replacing the oil equipment, which is a major project.

What is a dual-fuel system?

A dual-fuel system pairs a heat pump with a backup gas, propane, or oil furnace. The heat pump runs as the primary heat most of the year. At a set outdoor temperature, the system automatically switches to the furnace. This typically produces the lowest annual operating cost in NH.