Heating cost for a winter in Michigan
What each heating system would cost to run from November to March at today's prices.
Small home or mild winter: about 35 million Btu of heat a winter, roughly 300 gallons of heating oil.
Average home: about 60 million Btu of heat a winter, roughly 510 gallons of heating oil.
Large or drafty home: about 90 million Btu of heat a winter, roughly 760 gallons of heating oil.
What this means for Michigan
At today's prices, natural gas is the cheapest way to heat a home in Michigan: about $650 for an average winter, against $3,156 with heating oil and $1,792 with propane.
Switching from heating oil to a heat pump would save about $1,628 a winter (52%). Electric baseboard heat, at $3,821, is the most expensive option, because it turns each unit of electricity into one unit of heat while a heat pump moves two to three.
Where a gas main reaches the street, natural gas costs $650 a winter; moving to it from propane would save about $1,142 a winter (64%). Between the two delivered fuels, propane costs $1,792 and heating oil $3,156.
Prices behind the comparison
Cost per million Btu is the price of the same amount of useful heat, after each system's efficiency.
| Heating system | Price | Per million Btu of heat | Average winter |
|---|---|---|---|
| Natural gas 95% efficient condensing furnace or boiler |
$1.03 per therm | $10.83 | $650 |
| Heat pump Air-source heat pump, seasonal efficiency of 250% (a cold-climate model averages about this over a Northern winter; in milder states it does better) |
21.7¢ per kWh | $25.47 | $1,528 |
| Propane 90% efficient propane furnace or boiler |
$2.46 per gallon | $29.86 | $1,792 |
| Heating oil 85% efficient oil furnace or boiler |
$6.19 per gallon | $52.61 | $3,156 |
| Electric baseboard Electric resistance heat (baseboards, wall heaters) |
21.7¢ per kWh | $63.69 | $3,821 |
Heating oil and propane: this week's average from the EIA weekly survey (Michigan heating oil prices, Michigan propane prices). Natural gas: average residential price for November 2025 to March 2026. Electricity: average residential price for January to August 2026. Prices include delivery charges for gas and electricity, but heating oil and propane exclude tax. Where a fuel isn't surveyed in Michigan, the U.S. average is used.
Before you switch
- Running cost isn't the whole story. A heat pump typically costs $10,000 to $20,000 installed for a whole house, and a gas line may not reach your street. Federal and state rebates can cut that a lot; ask your electric utility what's on offer.
- Heat pumps lose efficiency in deep cold. Cold-climate models keep working well below zero, but many homes keep their oil or propane boiler as backup for the coldest days. Even then, a heat pump covering most of the winter can cut fuel use by half or more.
- Your own bills are the best guide. Add up last winter's deliveries and compare them with the figures above, then pick the home size that matches.
Common questions
Is a heat pump cheaper than heating oil in Michigan?
Yes. For an average home a heat pump costs about $1,528 a winter to run in Michigan, against $3,156 for heating oil, at 21.7 cents per kWh and $6.19 a gallon.
Is natural gas cheaper than propane in Michigan?
Yes. Natural gas costs about $10.83 per million Btu of heat in Michigan and propane $29.86, so an average winter costs $650 with gas and $1,792 with propane.
How much does it cost to heat a house with oil in Michigan?
About $3,156 for an average winter (roughly 510 gallons) at $6.19 a gallon, from about $1,841 for a small or well-insulated home to $4,735 for a large or drafty one.
How much does it cost to heat a house with propane in Michigan?
About $1,792 for an average winter (roughly 730 gallons) at $2.46 a gallon, from about $1,045 for a small home to $2,688 for a large one.
How is the cost worked out?
Each fuel's price is divided by the heat it contains and by how efficiently a typical modern system turns it into heat in your home: 85% for an oil boiler, 90% for propane, 95% for gas, 100% for electric baseboards and 250% for a heat pump over a winter. An average home needs about 60 million Btu of heat from November to March.