Converting an Oil Furnace To Natural Gas
Updated Aug. 20, 2018
Many natural gas companies recommend that homeowners switch their oil furnaces to natural gas. Natural gas is certainly more versatile than fuel oil -- you can use it to run your furnace, stove, washer and dryer, grill and other home appliances. However, there are significant tradeoffs to consider.
Benefits of Natural Gas
Natural gas is piped into your home from a gas supplier, in much the same way that city water is piped into many people's homes. This means that you don't have to remember to refill your oil tank. (However, many oil suppliers will automatically refill your tank when it runs low.) Here are a few more benefits:
- Natural gas can burn more completely than fuel, which means that your furnace can be more efficient.
- If you're buying new equipment, the most efficient gas-burning furnaces are quite a bit more efficient than the most efficient oil-burning furnaces.
- With oil you often (though not always) pre-pay. With natural gas you typically pay a month after you've used the gas.
- Natural gas companies often offer rebates to switch to gas -- occasionally including a new gas furnace or boiler!
- Most (84%) of the natural gas consumed in the United States is produced in the US. (source) Some commentators have suggested that this makes the cost of natural gas less volatile.
- You may be able to heat your home more cheaply with natural gas. However, there are quite a few variables to be considered, so don't assume that this is true.
Drawbacks of Converting to Natural Gas
Before you even consider switching to Natural Gas, make sure there is a gas supplier in your area, and that hookups are available for your house.
If your house does not already have natural gas, you will need to connect to the gas main. Typically this involves burying a pipe from your house to the street. You may also need to run new piping inside your house. Some HVAC contractors recommend against running natural gas through copper piping. If you currently have copper piping you may need to swap it out.
Converting your existing oil-burning furnace or boiler to natural gas is likely to be expensive. At a minimum you will need to replace the burner, and many older models simply can't be upgraded. However, if you need to replace an older oil furnace anyway, natural gas may make sense. Check to see if your water heater currently burns fuel oil -- if it does, you'll need to switch your water heater to natural gas as well, which will increase your up-front costs. (On the flip side, natural gas water heaters are substantially cheaper to buy than oil-fired water heaters.)
Finally, if you are no longer using your old fuel oil tank, you'll probably want to get it hauled off to the dump -- otherwise it will be an eyesore, and could make your home less attractive. Gas companies will occasionally haul the tank away as an incentive to switch to gas.
How do I know if natural gas is available for my home?
If you’re new to the neighborhood or have spent years relying on fuel oil to run your appliances, switching to natural gas can seem like a daunting task. How do you even know if your neighborhood has a piped supply from a natural gas company? The following suggestions can help:
- Ask your neighbors. Do they have a natural gas supply to their home? Some of them might be longtime residents who have advice on dealing with the local utility companies.
- If you’re a longtime resident yourself or simply want to be certain, you can directly call the local utility company and ask about natural gas options.
- Furthermore, if you’re unsure of who services your area, you can search in google for “natural gas availability” to determine who to call. Some websites can even tell you directly whether or not natural gas is available to you by looking up your address.
- If you’re thinking about purchasing a home in an unfamiliar area and you’re unsure about the natural gas supply, you can ask the seller or the realtor. They typically have plenty of information about the home’s logistics.
Are there rebates available to pay for the conversion?
Before making the switch to a natural gas furnace, you probably want to make sure you’re receiving the best deal. Therefore, it’s important to be aware of potential money-saving opportunities. The Environmental Protection Agency offers federal tax credits through their Energy Star program. Gas furnaces are typically more efficient than oil furnaces, and (in 2018) if you switch to a gas furnace with an AFUE of 95% or above, the Energy Star program offers a $150 tax credit for the furnace and a $50 tax credit for the advanced main air circulating fan.
Additionally, many natural gas suppliers offer rebates for customers who convert to natural gas -- a quick call can let you know if you your local utility company offers a rebates. Peoples Gas, National Grid, DTE Energy, and Nicor Gas are among the many utility companies that offer rebates for natural gas furnaces or furnaces with an AFUE of 95% or above.
What expenses are involved?
When estimating the cost of a conversion to a natural gas furnace, it is important to determine the changes you’ll have to make to your house.
Your area must have a natural gas supplier, and your house must be hooked up to the area’s gas supply. If your house doesn’t have hookups to the main gas supply, then you’ll need to bury a line from your house to the street. You might also need to add gas piping inside your house, and replace any copper piping with steel or another approved material. Burying a line or adding piping in the house can cost between a few hundred dollars to a few thousand. It all depends on the quotes you receive from contractors in your area and the cost of piping material.
Next, you’ll have to factor in the price of your new furnace and the installation. The average cost of a new natural gas furnace can be anywhere from $700-$1400 with installation costs of up to several thousand dollars more. This cost calculator can help you determine the average price of a natural gas furnace installation in your area.
How can I calculate my natural gas costs?
Natural gas furnaces are more efficient than fuel oil furnaces, so it’s possible to save on your energy bills after converting to a natural gas furnace. But what makes up your monthly natural gas bill, and how can you estimate it?
Gas bills vary between states and cities, and a big factor in the amount you pay for energy is the distance between your residence and the areas producing natural gas. When you receive your gas bill, you are looking at:
- The cost of the commodity (in this case, the natural gas)
- The cost of delivering the gas
- Taxes and other charges
The following tips can help you save on your energy bills.
- Look for “customer choice” programs. These allow providers to compete for your business based on cost.
- Participate in a utility’s budget plan which spreads the cost of gas out evenly over a year
- Lower your thermostat during cold months
In short, your natural gas bill is the sum of the amount of natural gas you’ve used that month (heavily influenced by your state’s average rates), the distribution fee, taxes, and any additional charges.
Moving unsightly storage tanks
Some homeowners wish to convert their oil furnaces or boilers to natural gas because of large, obtrusive oil tanks. Oftentimes, these oil tanks are outside and take up needed space in the backyard. If natural gas isn’t offered in your area, or the initial price of conversion is simply too high, one alternative is to keep your oil heat but move the oil tank into the basement to free up yard space. Fuel oil isn’t highly flammable, and as long as the tank isn’t damaged or rusted, it’s safe to put inside. Additionally, some companies produce small, 275 gallon oil tanks to fit down basement stairs. In either case, fill piping is required so that the tank can be filled from outside of the house. Even after installation of the fill piping or purchasing of a smaller oil tank, this might be a more reasonable option for some homeowners than conversion.
In conclusion, the decision to switch to natural gas is not necessarily straightforward. You'll need to work closely with a trusted HVAC contractor that can help you compare the costs and benefits.