How to Estimate Propane Heating Costs

Propane heat is an alternative to electric or oil-based heating systems.

Those who already have propane furnaces may wish to estimate heating costs to ensure they have sufficient funds in the budget for heat. Fortunately, most homeowners can estimate propane costs fairly easily using current prices and basic information about their heating system.

1. Calculate your propane heating costs using this formula: Heating Costs = (Propane cost per gallon/energy content of propane) x (annual heating load/efficiency rating of heater).

2. Estimate your annual heating load. This is the total volume of heat you use each year, measured in British Thermal Units (BTUs). It's based on things like the size of your home, your insulation levels and local weather patterns. For example, according to North Dakota State University, the average North Dakota home requires 80 million BTUs per year. A home in Minnesota, which experiences periods of extreme cold, requires 100 million BTU's per year on average, according to the Minnesota Department of Commerce. Use the calculator in the Resources to find your estimated BTUs. You can also refer to the Duke Energy link under Resources to make basic BTU estimates.

3. Find the efficiency rating of your furnace. Check the label for this information, which is listed using an "annual fuel utilization efficiency" or "AFUE" rating. Most units will be equipped with a label that provides the AFUE in terms of a percentage. You can also estimate your AFUE rating based on the type of furnace you're planning to buy. According to "Energy Savers," the oldest, least efficient units have a rating of 68 to 72 percent, while the standard unit ranges from 80 to 83 percent. High-efficiency condensing units range from 90 to 97 percent. Convert your percentage to a decimal when plugging it into the formula in step 1. For example, 90 percent becomes 0.90.

4. Understand energy content. The energy content of a fuel source is the amount of energy, in BTUs, that the fuel provides per gallon. According to "Home Energy Magazine Online," the energy content of propane is 92,700 BTUs per gallon.

5. Call local propane suppliers to ask about current propane prices. Because propane is made from fossil fuels, prices tend to fluctuate quickly. According to the U.S. Department of Energy, the average price per gallon of propane was $1.87 as of 2007.

6. Plug these numbers into the formula in step 1, and calculate your propane costs. Let's assume a home requires 80 million BTUs of heat per year and is heated using a furnace with an AFUE of 90 percent. Here, propane cost equals ($1.87/92,700) x (80,000,000/0.90), or 0.00002017 x 88,888,889. In this example, annual propane heating costs would be approximately $1,793.