Propane, Natural Gas, Fuel Oil or Electric: What Heats a Twin Ports Home Cheapest?

Where the gas main actually ends

This matters more than anything else in a heating decision here, and a lot of homeowners are not certain which side of the line they are on.

Natural gas serves Duluth, Superior, and parts of Hermantown, Proctor, Cloquet, Scanlon, Esko, Carlton, Two Harbors and Moose Lake. Within those footprints, natural gas is comfortably the cheapest way to heat, and a high-efficiency condensing furnace or boiler is usually the right answer.

Step outside those service territories — which is the large majority of the land area inside our radius — and there is no gas main. That covers nearly all the rural Douglas County townships, the rural St. Louis County areas, most of rural Carlton County, the Pine County edge and the Bayfield County shore towns. Out there you are on propane, fuel oil, or electric with a wood or outdoor-boiler assist.

Sometimes the line runs down one road and not the next. It is the first thing we establish before quoting, because it changes the recommendation entirely.

How the fuels compare

Natural gas: cheapest per BTU where available, stable, no tank, no deliveries. If you have it, the decision is usually about efficiency tier rather than fuel.

Propane: considerably more expensive per BTU than natural gas, and the price moves with the market and with your delivery contract. It also has a cold-weather quirk worth knowing — vapour pressure falls as the tank gets cold, so a low tank on a very cold night can under-supply a furnace running continuously. That presents as a furnace that only struggles in extreme cold.

Fuel oil: expensive, and the equipment needs more attention — nozzles, electrodes, filters, cad cells and combustion tuning. Still heating a number of older rural properties here. If you are on oil, you have the strongest economic case for changing something.

Electric resistance: the most expensive way to make heat, full stop. Baseboard or electric furnace as a primary heat source in a 9,000+ heating-degree-day climate produces the bills people tell stories about. Worth noting though: some rural electric cooperatives offer off-peak or dual-fuel rates that change this arithmetic substantially, so check what rate you are actually on.

Wood: genuinely cheap if you cut your own, which is why outdoor wood boilers and wood stoves are common across the townships. The caveats are labour, and combustion air — a wood appliance drawing air can depressurise a tight house enough to backdraft a propane furnace or water heater, which needs testing rather than assuming.

Why this decides the heat pump question

A cold-climate heat pump's value depends entirely on the ratio between your electricity price and your heating fuel price. That is the whole calculation.

If you burn propane or fuel oil, the ratio is strongly in the heat pump's favour. The heat pump delivers two to three times more heat per dollar of electricity than the fuel does per dollar, across most of the heating season. Combined with Minnesota Power or Focus on Energy rebates and the federal credit, this is the best HVAC investment available in the rural parts of our service area — and it is why we raise it on nearly every rural quote.

If you have cheap natural gas in Duluth or Superior, the ratio is much closer, the switchover temperature sits higher, and the payback stretches. A heat pump still makes sense if you want air conditioning anyway, because you get the cooling plus rebates for a similar installed cost. As a pure heating-cost play on cheap gas, it often does not, and we will say so.

In either case the honest answer comes from your actual utility rates rather than a generic chart, and that is the calculation we run before quoting.