If you’re choosing between a heat pump and an oil furnace, the cost savings and long-term efficiency gains of heat pumps are hard to ignore.
Despite a higher upfront investment, heat pumps consistently outperform oil furnaces in operating costs, energy efficiency, and environmental impact. In this guide, we’ll break down how these two systems compare in real-world performance, especially in colder climates.
Cost Per Million BTUs: How They Stack Up
Heat pumps generate heat at an average of $29.31 per million BTUs, while oil furnaces cost about $36.96 per million BTUs. This advantage stems from the heat pump’s higher efficiency—a typical Coefficient of Performance (COP) of 3.0, which means the system produces three units of heat for every unit of electricity consumed.
In comparison, oil furnaces have a COP around 0.84, making them less efficient and more costly to operate over time. With average heating oil prices in NH at $4.30 per gallon, switching to a heat pump can offer substantial cost savings, particularly as oil prices continue to fluctuate.
Even though installation costs for heat pumps range from $7,120 to $36,000, compared to $6,400 to $9,200 for oil furnaces, the lower operating costs and energy savings often offset the initial investment within a few years.
Understanding Efficiency Metrics
When comparing heating systems, performance metrics are critical. The Coefficient of Performance (COP) is the most important number to watch. A higher COP means greater energy output for every input dollar spent.
- Heat Pumps: COP around 3.0 to 4.0 (up to 48,757 BTUs per dollar at COP 4)
- Oil Furnaces: COP around 0.84
Modern heat pumps deliver much more heating energy per dollar, particularly in well-insulated homes or moderate climates. These metrics translate into real financial benefits over time.
Real-World Operating Expenses
When it comes to day-to-day heating costs, the numbers favor heat pumps:
- Heat Pump: $29.31 per million BTUs
- Oil Heating: $36.96 per million BTUs
In a 2,000 sq. ft. home, this translates to an estimated annual savings of $846 with a heat pump. While oil systems require regular fuel deliveries and more intensive upkeep, heat pumps run on electricity and only need routine maintenance like filter changes and an annual check-up.
Oil systems burn about 6.5 gallons of oil per day in winter, requiring frequent refills and higher fuel costs. In contrast, heat pumps maintain steadier operating expenses and use electricity, which is often less volatile than oil.
How Heat Pumps Perform in Cold Weather
Modern cold-climate heat pumps are engineered to maintain efficiency in temperatures as low as -15°F to -30°C. While oil heating has long been trusted in cold climates, today’s variable-speed and ground-source heat pumps offer reliable performance in winter with significantly better energy efficiency.
- Heat Pump COP in cold climates: 2.0 to 3.0
- Oil Furnace COP: 0.84
If you’re in a very cold region, hybrid systems or ground-source heat pumps are worth considering. These systems draw stable warmth from underground, delivering consistent performance regardless of outdoor conditions.
Long-Term Financial Benefits
Over time, heat pumps prove to be a more financially sound investment. Beyond lower monthly energy costs, they offer:
- Reduced maintenance (no fuel tanks or combustion systems)
- Dual-functionality (heating + cooling in one unit)
- Rebates and incentives (state/federal programs can offset installation costs)
- More stable pricing (protection from oil market volatility)
For many homeowners, the combination of lower operating expenses and reduced maintenance creates a meaningful return on investment.
Factors to Consider Before Choosing
Here are the most important points to compare:
| Factor | Heat Pump | Oil Furnace |
| Efficiency (COP) | 3.0 | 0.84 |
| Operating Cost/MBTU | $29.31 | $36.96 |
| Installation Cost | $7,120 – $36,000 | $6,400 – $9,200 |
| Maintenance Needs | Low (filters, annual checkup) | High (deliveries, tune-ups) |
| Environmental Impact | Low emissions | High emissions |
| Fuel Type | Electricity | Heating Oil |
You’ll also want to factor in your home’s existing infrastructure, energy prices, and personal preferences. For most homeowners in the Mid-Atlantic region, where winters are moderate and electricity is stable, heat pumps deliver better value.
Talk to the Experts at BPM Heating & Cooling
As a trusted HVAC contractor in Frederick, MD, BPM Heating & Cooling has installed and serviced both oil and heat pump systems across a wide range of homes. Our team can help you analyze your current energy costs and determine whether switching to a heat pump makes financial and environmental sense for your household.
We offer free quotes, expert installation, and long-term maintenance plans for both residential and commercial systems.
Contact us at (240) 200-0887 or visit us at 300 E 4th St Unit A, Frederick, MD 21701. Schedule your consultation at bpmhvac.com and discover how much you could save with a modern heat pump system.
