Heating oil vs LPG:
which costs less?

The key difference: energy content and price

To compare the two fuels fairly, you need to look at cost per unit of usable heat rather than cost per litre or per kilogram. The two fuels have different energy densities and burn at different efficiencies in typical boilers.

Approximate figures for 2026. Prices vary by region and supplier. Bottled LPG is significantly more expensive than bulk.

On pure running cost, heating oil has a clear advantage in the UK in most years. This has been consistently true for the past decade, with the gap widening during periods of high oil prices when LPG tends to rise proportionally more due to its petrochemical feedstocks.

Annual running cost comparison

Using typical consumption figures for a three-bedroom detached house in the UK (around 18,000 to 22,000 kWh of heat per year):

The difference is significant. Most households switching from LPG to heating oil report annual savings of £500 to £1,200, depending on their consumption and how well they time their purchases.

Switching from LPG to oil: what is involved

If you are currently on LPG and considering switching, the main considerations are:

New tank and boiler

You cannot use an LPG boiler with heating oil or vice versa. The burner technology is fundamentally different. Switching requires a new oil boiler (typically £2,500 to £4,000 installed) and an oil storage tank (£1,000 to £2,000 for a standard above-ground bunded tank). Total installation cost is typically £3,500 to £6,000 depending on the property.

At a saving of £700 per year on fuel, the payback period is typically five to eight years. Given that boilers last 15 to 20 years, the switch usually makes financial sense if you plan to stay in the property long-term.

Planning permission

Oil tanks under 3,500 litres in most locations are permitted development and do not need planning permission. LPG tanks have slightly different rules. Both types of installation need to comply with building regulations and OFTEC (oil) or Gas Safe (LPG) requirements.

Space requirements

An oil tank needs to be sited away from buildings, boundaries, and drains. A standard 1,000-litre bunded plastic tank is around 1.3m wide by 1.3m deep by 1.2m high. Most properties with an LPG tank will have adequate space for an oil tank.

When LPG might be the better choice

Despite the higher running cost, LPG has genuine advantages in some situations:

• Barn conversions and listed buildings where pipework routing makes oil delivery access impractical but LPG can be sited more flexibly
• Very small properties where annual consumption is low enough that the cost difference is modest in absolute terms
• Properties already set up for LPG where the switching cost is not justified by the remaining years of ownership
• Combined heating and cooking: LPG can supply both a boiler and a gas hob from the same tank, which some households prefer to a separate oil boiler and electric hob

Both fuels compared to heat pumps

It is worth noting that both heating oil and LPG face a long-term challenge from air source heat pumps, which can run at efficiencies of 250 to 350% (meaning three to three and a half units of heat for every unit of electricity consumed). At current electricity prices, a heat pump running at 300% efficiency costs around 8 to 10p per kWh of heat, which is broadly comparable to heating oil. As electricity prices fall relative to fossil fuels over the coming years, heat pumps are expected to become the cheaper option for most off-grid homes.

For now, heating oil remains the most cost-effective fossil fuel option for the majority of UK off-grid properties. Our oil boiler vs heat pump guide covers this comparison in more detail.