Gas Cost Compared With Other Fuels

Since 2001, most energy prices have risen to the highest levels in history. Natural gas prices have risen, but gas is still less than other common energy sources. These are typical energy economics for most homes in Eastern Kentucky:

A mid-size home uses about 60 MCF of gas, or 72 million BTU’s per year. In late 2024 this amount of energy from Gas cost $701 while from Electricity cost $2,207. The chart shows the relative cost of different fuels compared to Natural Gas.

Over many years in Eastern Kentucky, natural gas has remained well under 1/2 the cost of propane or electric heat. Why?

Propane is extracted from natural gas. The cost per BTU must stay higher or no propane is made. The cost of truck delivery is also higher than by gas pipeline.

The all-electric house has been marketed for decades even though the cost has always been much higher than natural gas. That’s because most electricity is generated by Fossile Fuel-fired plants, where conversion is only 30% efficient. This means 70% of the heat from burning fuel is wasted as heat out the smokestack and cooling towers.

Electric heat pumps are more efficient than electric heaters*, but the heat pump needs a water source to exchange enough heat for Kentucky winters. The air register output at 88°F doesn’t feel “warm” like a gas furnace and the heat pump lasts about 1/2 as long.

Over the entire life cycle, electric heat costs much more. For these reasons all-electric homes sometimes suffer on resale value because of the heating choice.

Renewable energies like hydro, biomass, wind, and solar now contribute 21%, and nuclear energy produces about 19% of US electrical generation.  However fossil fuels still provide the majority.  With this mix of sources the cost of electricity will remain high. 

Natural gas is much less expensive and cleaner.

*Electric heat pumps, fuel oil furnaces, and wood burners don’t provide hot water which requires about 250 therms per year. Electric water heaters cost about $400 per year to operate. Gas is about $200, so the electric water heater costs $17 per month more than gas year after year.