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Heat pump vs gas furnace running costs

Compare heating fuels on one scale: cost per million BTU of delivered heat. Worked examples, the break-even electricity price, and what changes the answer.

By Free HVAC Calculators Editorial Team · Published October 25, 2026 · Updated October 25, 2026

Content disclosure: AI-assisted, with human factual and technical review before publication.

Whether a heat pump or a gas furnace costs less to run has no single answer. It depends on two prices, electricity and gas, and on two efficiencies. Once you put every fuel on the same scale, the comparison takes a minute with your own bills.

The common scale: cost per million BTU of delivered heat

Fuels are sold in different units: therms of gas, gallons of propane or oil, kilowatt-hours of electricity. Each unit contains a known amount of energy:

  • Natural gas: 100,000 BTU per therm
  • Propane: 91,452 BTU per gallon
  • Heating oil (No. 2): 138,500 BTU per gallon
  • Electricity: 3,412 BTU per kWh

Not all of that energy reaches the house as heat. A furnace's AFUE (annual fuel utilisation efficiency) is the share of fuel energy delivered as heat over a season. A 95% AFUE furnace delivers 95,000 BTU from each therm.

A heat pump does better than "100%" because it moves heat from outdoors rather than making it. Its seasonal rating, HSPF2, is heat delivered in BTU per watt-hour. An HSPF2 of 7.5 means 7,500 BTU of heat per kWh, a seasonal COP of about 7.5 ÷ 3.412 ≈ 2.2.

So the cost of one million BTU (MMBtu) of delivered heat is:

  • Gas: price per therm ÷ (100,000 × AFUE) × 1,000,000
  • Heat pump: price per kWh ÷ (HSPF2 × 1,000) × 1,000,000
  • Electric resistance: price per kWh ÷ 3,412 × 1,000,000

A worked example with U.S. average prices

These use recent U.S. Energy Information Administration averages: gas about $1.44 per therm (February 2026, a heating-season month), electricity 18.31¢ per kWh (July 2026), propane $2.69 and heating oil $6.19 per gallon (October 2026, before tax).

  1. Natural gas, 95% AFUE: $1.44 ÷ 95,000 × 1,000,000 = $15.16 per MMBtu
  2. Natural gas, 80% AFUE: $1.44 ÷ 80,000 × 1,000,000 = $18.00 per MMBtu
  3. Heat pump, HSPF2 7.5: $0.1831 ÷ 7,500 × 1,000,000 = $24.41 per MMBtu
  4. Propane, 95% AFUE: about $30.96 per MMBtu
  5. Heating oil, 85% AFUE: about $52.58 per MMBtu
  6. Electric resistance (baseboard or strip heat): $0.1831 ÷ 3,412 × 1,000,000 = $53.66 per MMBtu

A house that needs 50 MMBtu of delivered heat a year would pay about $758 with the high-efficiency gas furnace and about $1,221 with the heat pump at these prices. Against propane, oil or electric resistance heat, the heat pump is far cheaper.

National averages hide large local differences. In many places electricity is much cheaper or gas much dearer than these figures, and the order changes. Use the prices on your own bills, including delivery charges per unit.

The break-even point

You can turn the comparison around and ask what electricity price makes the two equal:

Break-even electricity price = gas cost per MMBtu × HSPF2 × 1,000 ÷ 1,000,000

With gas at $15.16 per MMBtu and an HSPF2 of 7.5, the heat pump matches the gas furnace at about 11.4¢ per kWh. Below that, the heat pump is cheaper to run. Likewise, at 18.31¢ per kWh, a heat pump would need a seasonal HSPF2 of about 12 to match the 95% furnace.

What changes the answer

  • Cold weather. A heat pump's output and efficiency drop as the outdoor temperature falls. The HSPF2 rating comes from a standard test, and real seasonal performance in a cold climate can be lower. Cold-climate models hold their efficiency better. The manufacturer's performance data at low temperatures is the best guide.
  • Backup heat. Many heat pumps switch to electric resistance strips in very cold weather. Hours on strip heat cost about twice as much as the heat pump in the example above.
  • Dual fuel. A heat pump paired with a gas furnace can run whichever is cheaper at each outdoor temperature.
  • Fixed charges. If a heat pump lets you disconnect gas entirely, the monthly gas connection charge goes too. That saving is not in the per-MMBtu figures.
  • Cooling. A heat pump also replaces the air conditioner, so compare whole systems, not just winter fuel.

Finding your annual heat need

A practical way is to start from last winter's gas use: therms used × furnace AFUE ÷ 10 gives MMBtu of delivered heat. For example, 600 therms through an 80% furnace is 600 × 0.80 ÷ 10 = 48 MMBtu.

The heating cost calculator runs all five fuels side by side with your prices and efficiencies. If you are replacing equipment, the furnace sizing calculator estimates the heating load, and a Manual J calculation confirms it.

Key points

  • Compare fuels as cost per million BTU of delivered heat, using AFUE for furnaces and HSPF2 for heat pumps.
  • At recent U.S. average prices, a 95% gas furnace costs about $15 per MMBtu and a 7.5 HSPF2 heat pump about $24.
  • The heat pump wins where electricity is cheap relative to gas, and it easily beats propane, oil and electric resistance heat.
  • Cold-climate performance, backup heat and fixed charges can change the result, so use your own prices.

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