7 Oil Furnace Replacement Options And Alternatives

Oil furnaces are wonderful servants. For one, they provide the hottest flames. Thus, you can look forward to a warmer home. Oil burners also heat up fast, meaning you don’t have to wait too long to feel the heat.

Above all, oil is a highly efficient energy source. For example, some oil furnaces are as efficient as 99% AFUE. This is better than standard natural gas and propane heaters. Unfortunately, oil heating comes with many downsides that make it one of the worst fuel choices for primary home heating.

For one, oil is very expensive. According to Scientific America, it costs a staggering $2,535 to heat your home with oil throughout the winter season (October 31 to March 31). Meanwhile, you only need $732 worth of natural gas to achieve the same comfort level over the said duration. Additionally, oil has the biggest carbon output of all fossil fuels.

It produces tons of soot and dirt, resulting in wasted energy while necessitating intensive maintenance. As a result, many homeowners consider a dying oil furnace an opportune time to replace the unit with a more efficient, less maintenance-intensive heating system.

Read on to learn why replacing your oil furnace can be a great idea, how to time the replacement and some of the best replacements for oil furnaces.

Should I Replace My Oil Furnace?

Yes, you should strongly consider replacing your oil furnace if circumstances allow. The following are four important reasons to consider a replacement;

  • Improve heating efficiency

Although oil produces some of the hottest flames, oil furnaces can also be incredibly wasteful. Granted, newer oil heaters are a lot more efficient. However, if you still have one of the old ones, there’s a chance you lose up to 30% of the fuel to exhaust gases.

  • Reduce maintenance needs

No one wants to clean the furnace every few days. Unfortunately, that’s the routine when operating an oil furnace. The furnaces generate large amounts of heat that can quickly block the exhaust pipes, causing untold risk. Thus, you must clean the relevant parts regularly.

  • Reduce your carbon footprint 

 The worst part about the soot and smoke is that the two are carbon emissions that directly add to your carbon footprint. So, it makes sense to switch to cleaner fuels to save the environment and world, and ditching oil is the first step. 

  • Enjoy lower heating costs

Finally, switching from oil to newer heating solutions can have a massive impact on your bank balance. As we saw earlier, you can save as much as $1,800 by simply switching from oil to natural gas. A switch to solar takes the savings even higher.

How Do I Know My Furnace Needs to Be Replaced?

Obviously, you can’t just wake up one morning and decide to replace the oil furnace – even if it’s brand new. It doesn’t make economic sense. Instead, you should look out for the following signs to help you perfectly time the replacement for the highest economic impact;

  • Your oil furnace is older than 15 years
  • Your heating bills are through the roof
  • You need furnace repairs almost every month
  • The furnace doesn’t put out enough heat anymore
  • The burner flame is yellow or orange and too sooty
  • The furnace makes strange, loud noises

Best Replacements for an Oil Furnace

Ideally, you want to catch at least two of the above issues before replacing the old furnace. However, when that time finally comes, the following are the best options to replace the old oil furnace.

1. A modern oil furnace

If you’re a big fan of oil furnaces, then you can simply replace the old unit with a new, modern, and more efficient oil furnace. For one, newer oil furnaces are vastly more efficient than older models. Whereas models from the 80s and 90s are between 70% and 80% AFUE, newer units can be as much as 99% efficient.

The best part is that you don’t need much work when replacing one oil furnace with another. So, replacement costs aren’t very high. Nevertheless, you should expect to pay $1,900 to $3,100 for the new furnace and $6,750 to $10,000 for total replacement, including labor charges.

2. Natural gas 

However, if you’re fed up with oil furnaces and looking to switch to a different fuel type, natural gas is the most popular fuel for home heating today. Natural gas is cleaner, affordable, safer, and more efficient than nearly all fossil fuel choices. It’s also far more reliable than electricity.

The only downside is that you can only switch to natural gas if your area has natural gas lines. Otherwise, you must find a different alternative. Installing a natural gas furnace costs just $800 to $2,800 without labor. However, you should prepare $3,800 to $10,000 for the replacement process, including labor charges.

3. Propane heating 

Another popular fossil fuel is propane. Propane comes with a few obvious downsides. For instance, no one enjoys refilling propane tanks every few weeks. Additionally, propane is more expensive than natural gas.

However, it also has several significant advantages over other heating sources. For instance, propane produces more heat per unit than natural gas. It is also cleaner. So, it’s arguably a better choice than natural gas if you can find a working plan to refill your tanks without too much trouble.

It costs $900 to $5,000 to purchase a new propane furnace and $3,000 to $6,000 for the complete replacement, including labor.

4. Electric Heaters

Many people keep off electric heating because of cost and the inherent safety risks. However, if you can address the two, electricity becomes perhaps the best way to heat your home. For one, electric furnaces are the cheapest around. Even the largest ones rarely cost above $1,000. Better still, they are simple to install and maintain.

However, beware of the running costs. The average cost to run an electric heater in the US is $2,200/year. This is $1,400+ more than the cost of heating with natural gas. The cost to completely replace your oil furnace with an electric furnace is $2,000 to $7,000.

5. Heat pumps 

Heat pumps (also popular as mini-split systems) double up as heaters and air conditioners, though some are exclusively heaters. Nevertheless, they operate like air conditioners working in reverse – extracting heat from outside the house and dumping it inside the house to raise indoor temperatures.

Thus, they only transfer rather than generate heat. Heat pumps are some of the most efficient heating systems.

They are also low-maintenance. Unfortunately, mini splits are some of the most expensive heating solutions to install. It costs up to $14,00 to install a whole-home mini-split system and $6,000 to $30,000 to install mini-splits for the whole home.

6. Wood/coal

Furnaces that burn wood and coal aren’t common anymore, especially in urban centers and cities where the supply of the two materials is a challenge. However, you can still consider the two if you live in rural areas. Both offer plenty of heating power and will keep you and your family and guests toasty round the clock.

Wood and coal furnaces also “retain” heat for a long time after the flame goes out. Unfortunately, they are high-maintenance and expensive to purchase and run. It costs $3,000 to $10,000 to purchase a wood/coal furnace and $4,800 to $11,500 to replace your oil furnace with a wood/coal model.

7. Solar/geothermal

Finally, solar and geothermal are the two newest technologies for home heating. One can argue that solar has been around all along, which is true. However, mainstream solar heating has only picked up in the last few years.

The most significant advantage of geothermal and solar heating is energy efficiency. The two technologies are by far the most energy-efficient ways to heat your home during the winter months. Of course, they are also the most environment-friendly heating methods.

Unfortunately, both are super expensive to install. It costs $10,000 to $40,000 to purchase and install a geothermal heating furnace and $15,000 to $30,000 to purchase and install a solar heating system.


  • What is the lifespan of an oil furnace? Generally, an oil furnace lasts 20 to 25 years. However, some can last up to 40 years with good maintenances.
  • How much does it cost to remove and replace a furnace? It costs $2,000 to $6,000, on average, to replace an oil furnace. However, the actual replacement cost can vary from $2,000 to $40,000, depending on the chosen replacement. Solar and geothermal replacements are the most expensive.
  • Should you replace a 30-year-old furnace? Yes, you should strongly consider replacing a 30-year-old furnace. That said, though, it’s best only to replace it if it’s already problematic, i.e., using up too much fuel and requiring too frequent repairs.
  • Can you replace an oil furnace with a gas furnace? Yes, you can. Indeed, one of the best heating solutions when replacing your oil furnace is a natural gas furnace. Natural gas furnaces are affordable to install, energy-efficient, and cheap to run.
  • How do you know if your furnace is dying? The first thing is age. Any furnace older than 15 years is undoubtedly on its way out. Secondly, consider heat output. The furnace is dying if it seems to struggle to achieve and maintain the thermostat setting. Other common signs to watch out for include frequent repairs, high energy bills, and strange noises.


Replacing your old furnace shouldn’t be too big a problem once you’re ready. You can even replace it with a new, more efficient oil furnace. However, other excellent options to consider are a natural gas furnace, a propane unit, and an electric furnace or mini-split. Coal, wood, solar, and geothermal furnaces are other worthwhile considerations.