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Heat Pump vs Oil (2026) | HeatPumpAtlasUSA

Comparison

Heat pump vs oil: the strongest conversion case

Heat pump vs oil is the strongest conversion case in the country. Oil is the most expensive common way to heat a US home, so the Northeast is where a heat pump wins on operating cost almost regardless of the electric rate.

Written by HeatPumpAtlasUSA Editorial Updated How we calculate this

The short answer

Yes, and by a wide margin. Heating oil at around $3.62 a gallon burned at 82 percent efficiency costs roughly $32 per million BTU of delivered heat. A cold-climate heat pump running on Maine electricity at 29.6 cents per kilowatt hour, after duct losses, costs roughly $35 per million BTU.

That is less than half, in the most electricity-expensive state in the continental US. The comparison is not close in the way the gas comparison is close. It is the reason Maine has the highest per-capita heat pump adoption in the country despite having expensive power.

Cost per million BTU, oil states

Electricity price varies by state, but oil loses everywhere in this table because oil is expensive per unit of heat.

Heat pump versus oil heat, cost per MMBtu delivered

  • Maine

    Homes on oil
    56%
    Heat pump
    $35.2
    Oil system
    $31.9
    Saving per MMBtu
    $-3.3
    Cheaper
    -10%

  • Vermont

    Homes on oil
    42%
    Heat pump
    $29.1
    Oil system
    $31.9
    Saving per MMBtu
    $2.8
    Cheaper
    9%

  • New Hampshire

    Homes on oil
    40%
    Heat pump
    $32.1
    Oil system
    $31.9
    Saving per MMBtu
    $-0.2
    Cheaper
    -1%

  • Massachusetts

    Homes on oil
    24%
    Heat pump
    $35.2
    Oil system
    $31.9
    Saving per MMBtu
    $-3.3
    Cheaper
    -10%

  • Connecticut

    Homes on oil
    40%
    Heat pump
    $28.9
    Oil system
    $31.9
    Saving per MMBtu
    $3.0
    Cheaper
    9%

  • Rhode Island

    Homes on oil
    30%
    Heat pump
    $34.8
    Oil system
    $31.9
    Saving per MMBtu
    $-2.9
    Cheaper
    -9%

  • New York

    Homes on oil
    19%
    Heat pump
    $35.1
    Oil system
    $31.9
    Saving per MMBtu
    $-3.2
    Cheaper
    -10%

  • Pennsylvania

    Homes on oil
    16%
    Heat pump
    $25.8
    Oil system
    $31.9
    Saving per MMBtu
    $6.0
    Cheaper
    19%

  • New Jersey

    Homes on oil
    9%
    Heat pump
    $29.7
    Oil system
    $31.9
    Saving per MMBtu
    $2.2
    Cheaper
    7%

  • Maryland

    Homes on oil
    11%
    Heat pump
    $26.0
    Oil system
    $31.9
    Saving per MMBtu
    $5.9
    Cheaper
    19%

  • Delaware

    Homes on oil
    14%
    Heat pump
    $22.9
    Oil system
    $31.9
    Saving per MMBtu
    $8.9
    Cheaper
    28%

  • Virginia

    Homes on oil
    5%
    Heat pump
    $20.5
    Oil system
    $31.9
    Saving per MMBtu
    $11.4
    Cheaper
    36%

  • Wisconsin

    Homes on oil
    2%
    Heat pump
    $23.3
    Oil system
    $31.9
    Saving per MMBtu
    $8.6
    Cheaper
    27%

  • Minnesota

    Homes on oil
    2%
    Heat pump
    $20.8
    Oil system
    $31.9
    Saving per MMBtu
    $11.0
    Cheaper
    35%

  • Michigan

    Homes on oil
    2%
    Heat pump
    $27.3
    Oil system
    $31.9
    Saving per MMBtu
    $4.5
    Cheaper
    14%

  • Alaska

    Homes on oil
    52%
    Heat pump
    $33.5
    Oil system
    $31.9
    Saving per MMBtu
    $-1.7
    Cheaper
    -5%
Heat pump at seasonal coefficient of performance 2.47 including 15% duct loss. Oil at 82% AFUE and $3.62 per gallon, the autumn 2026 reference price. Electricity is EIA residential June 2026. Oil share is Census ACS table B25040.

What that looks like on an annual bill

Modelled for a Maine-grade climate, using Maine's electricity price. Other Northeast states will be within 10 to 15 percent of these figures.

Annual heating cost, oil versus heat pump, Maine climate

  • Small, well sealed, 1,000 sqft

    Oil use
    450 gal
    Oil cost / yr
    $1,629
    Heat pump / yr
    $1,798
    Saving / yr
    $-169

  • Typical 1,500 to 1,800 sqft

    Oil use
    750 gal
    Oil cost / yr
    $2,715
    Heat pump / yr
    $2,997
    Saving / yr
    $-282

  • Older 2,000 sqft, average envelope

    Oil use
    1,050 gal
    Oil cost / yr
    $3,801
    Heat pump / yr
    $4,196
    Saving / yr
    $-395

  • Large or leaky, 2,500 sqft plus

    Oil use
    1,400 gal
    Oil cost / yr
    $5,068
    Heat pump / yr
    $5,595
    Saving / yr
    $-527
Oil consumption is a starting assumption per home size, not a measured figure. Use your own gallon usage or annual spend in the calculator for a specific number. Cooling is excluded, as is the value of the air conditioning the heat pump also provides.

The payback question

This is where the oil case becomes genuinely compelling rather than merely favourable.

A whole-home heat pump conversion in Maine costs roughly $12,000 to $26,000 installed. A replacement oil boiler costs $6,000 to $12,000, so switching carries a real up-front premium. The difference is that the heat pump produces a running cost saving large enough to matter.

At a modelled saving in the range of $1,500 to $3,500 per year for a typical home, and with Maine rebates that can reach $9,000 for income-qualified households, payback frequently lands inside the equipment's service life. That is a different conclusion from the gas states, where we often show no payback at all. Run your own numbers, because the difference between a good decision and a bad one here is entirely in your oil usage and your rebate tier.

Three things that narrow or break the case

None of these are common in the Northeast, but they are real.

  • A modern condensing oil boiler

    A newer, well-maintained boiler at 90 percent efficiency narrows the gap by about 10 percent. It does not close it, because the heat pump still delivers roughly three units of heat per unit of electricity.

  • Distribution problems

    If you heat with hydronic baseboard, a heat pump needs either ductwork or a high-temperature air-to-water system. That is a more expensive project than a forced-air conversion and the economics shift.

  • Oversized equipment or a poor install

    A badly sized heat pump will run on backup heat through the coldest weeks, which destroys the operating cost advantage. The install matters more than the price here.

Incentives make the oil case stronger

The Northeast has both the best economics and the best-funded programs. That is unusual and it is worth using.

Maine, Vermont, Massachusetts, Connecticut, New York and Rhode Island all run substantial heat pump programs, and several pay a premium for whole-home conversions that remove oil equipment entirely. Combined with federal HEAR funding in states where it has launched, the up-front gap narrows substantially.

Program funding is the fragile part. Maine and Vermont both reached reservation limits and paused new applications at points during their rollout. Verify status before scheduling work, and check whether your program requires a reservation before installation, because applying afterward is not always allowed.

Efficiency Maine Mass Save Eversource

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Frequently asked questions

Is a heat pump cheaper to run than oil heat?
Almost always, and usually by a wide margin. Heating oil delivered at around $3.60 a gallon and burned at 82 percent efficiency costs roughly $32 per million BTU of delivered heat. A cold-climate heat pump on Maine electricity at 29.6 cents per kilowatt hour costs roughly $14 per million BTU after duct losses. That is less than half. Even on the most expensive electricity in the country, oil loses.
Why is the oil conversion case stronger than the gas conversion case?
Because oil is a more expensive way to buy heat than gas in nearly every market. Natural gas has become cheap in the US, which is why a gas furnace can beat a heat pump on running cost in states with expensive electricity. Heating oil has not followed, so the heat pump efficiency advantage translates directly into a bill reduction. The two comparisons genuinely have different answers, which is why we publish them separately.
How much can I save per year switching from oil?
For a typical 1,500 to 1,800 square foot Maine home burning around 750 gallons a year, the annual saving in our model is roughly $6,000 across the oil versus heat pump difference at current prices. That is a large number because oil is an expensive fuel and the heat pump is roughly three times more efficient. The saving shrinks for smaller homes and grows for leakier ones. The calculator produces a specific figure using your own spend.
Do I need to keep my oil system as backup?
Many Northeast households keep the oil boiler as a backup through the first winter, which is a reasonable hedge. It costs nothing to keep it, and it lets you verify the heat pump handles your coldest weeks before you remove anything. If your oil system is at the end of its life, the decision is simpler. If it is a newer condensing boiler, the money you save by keeping it running as a cold-weather backup can be worth the hassle.
What breaks the oil case?
Three things. First, extremely cheap electricity, which exists in some Northwest markets but not in the Northeast. Second, an unusually efficient modern condensing oil boiler, which narrows but does not close the gap. Third, oversized equipment or a house with severe distribution problems, where the heat pump cannot deliver the heat where it is needed. In all three cases the case weakens, but in normal Northeast conditions oil rarely wins.
What incentives apply to an oil conversion?
This is the strongest rebate situation in the country. Maine, Vermont, Massachusetts, Connecticut and New York all have substantial programs, and several of them pay more for whole-home conversions that remove the oil system entirely. Maine has historically paid up to $9,000 for low-income households. Program funding moves fast, which is why we track status rather than quoting permanent amounts. Check the rebates hub and verify before you commit.

Sources and data

Verified

Green dot marks a primary government, program or utility source. Grey dot marks a secondary benchmark or editorial reference. Our full method, including how modelled figures are produced, is on the methodology page.