PhillyHomeCosts

Switching From Oil Heat in the Philadelphia Area

By Jess Maren · Sources verified by the editorial team on Oct 31, 2026

About 1 in 4 occupied homes in Bucks County heats with oil (58,918 of 249,187), according to the Census Bureau's 2020–2024 American Community Survey (table B25040). By our arithmetic from the same table, that's about 18% in Chester County, 15% in Montgomery and 13% in Delaware County. In Philadelphia it's under 3%. These are survey estimates with margins of error. If your oil boiler or furnace is getting old, the choice isn't just which brand to buy. It's which fuel you'll use for the next 20 years.

Your options compared

Option What it usually involves Installed cost we found Source
New oil boiler Swap the boiler; keep the tank, chimney and radiators $5,800–$11,800 (Philadelphia, modeled). National: standard efficiency $3,300–$7,200, high efficiency $6,300–$9,000 Angi Philadelphia; HomeGuide
New oil furnace Swap the furnace; keep the tank and ducts $4,800–$12,800 (Philadelphia, modeled). National average replacement: $2,500–$6,000 Angi Philadelphia; HomeGuide
Oil to natural gas New gas boiler or furnace, gas line and meter, venting changes (often a chimney liner), tank removal or closure National: average $8,500; most pay $5,000–$12,000. Gas and propane boilers in Philadelphia: $4,200–$10,800 (modeled) Angi oil to gas; Angi Philadelphia
Oil to a whole-home heat pump Cold-climate heat pump sized for the whole heating load; ductless heads if you have radiators and no ducts; electrical work; tank removal or closure National estimate: $17,000–$23,000 for 1,500–2,500 sq ft (median $19,500); $22,500–$28,000 for 2,500–5,500 sq ft (median $25,000) Rewiring America
Hybrid (heat pump plus fossil backup) Heat pump carries most of the load; a boiler or furnace covers the coldest days National: Angi lists hybrid systems at $2,500–$10,000 Angi heat pump costs (see our heat pump guide)

Sources: Angi (Philadelphia page updated Apr 25, 2026; oil-to-gas page updated Oct 29, 2026), HomeGuide (boiler page Dec 31, 2025; oil furnace page Feb 5, 2026), Rewiring America (report dated Mar 1, 2024, data as of March 2024). Only the rows marked Philadelphia are local; everything else is national. Angi's figures are modeled estimates, not quotes.

Why the heat pump row is so wide. Rewiring America's ranges are the 20th to 80th percentile of project costs from Massachusetts and California programs, adjusted to national averages. It notes that "Homes in colder climates or in regions with high labor costs are likely to fall at the higher end of these ranges." The underlying program numbers swing even more. A Massachusetts whole-home pilot (158 projects, May 2019–June 2021) had a median of about $18,300 and a range of $5,000 to $58,000. New York's NYSERDA reported $10,000–$30,000 across 386 projects, averaging $16,300.

Homes with radiators. Most oil homes here heat with a boiler and radiators or baseboard, not ducts. A heat pump can't just plug into a radiator loop. Your contractor will usually propose ductless units, new ducts, or a hybrid that keeps the boiler. Our heat pump guide has national prices for ductless systems by number of zones.

What adds to the cost of switching fuels

National figures for the extras that come with leaving oil:

Item HomeGuide (national) Angi (national)
Gas service to the house $0 to $2,000, "depending on if the gas company provides free installs" Not listed separately
Gas piping inside the house $15 to $50+ per linear foot $15–$25 per linear foot
Chimney liner $1,500 to $4,000 $500–$2,000
Old tank removal $400 to $3,400 (boiler page); $400–$1,500 above ground, $1,000–$3,500 underground (oil furnace page) $50–$600 "Oil tank removal and disposal"
Permits $250 to $1,500 for oil furnace permits and inspections $50–$300

Sources: HomeGuide boiler replacement cost (Dec 31, 2025); HomeGuide oil furnace cost (Feb 5, 2026); Angi oil to gas (Oct 29, 2026). All national. The two sites disagree a lot on tank removal and chimney liners, so get these items priced separately in your quotes.

For a heat pump, HomeGuide puts an electrical panel upgrade at $1,800–$2,500 nationally "if your current panel can't handle the heat pump's power requirements." See our heat pump guide.

What each fuel costs to run

We compared the cost of one million Btu of heat delivered to your rooms. This is our arithmetic, using the latest EIA prices and the assumptions below.

Fuel Price used (EIA) Our efficiency assumption Cost per million Btu delivered, PA NJ
Heating oil PA $6.048/gal; NJ $6.381/gal (week of Oct 26, 2026, excluding taxes) 85% $51.37 $54.20
Natural gas PA $15.04/Mcf; NJ $14.21/Mcf (2025 annual residential average) 95% $15.28 $14.44
Heat pump, seasonal COP 2.0 PA 21.13¢/kWh; NJ 24.09¢/kWh (residential average, January–August 2026) — $30.96 $35.30
Heat pump, seasonal COP 2.5 Same — $24.77 $28.24
Heat pump, seasonal COP 3.0 Same — $20.64 $23.53

Sources: EIA weekly heating oil prices (released Oct 28, 2026); EIA residential natural gas prices for Pennsylvania and New Jersey (released Oct 30, 2026); EIA Electric Power Monthly table 5.6.B (released Oct 23, 2026); EIA Btu conversions (138,500 Btu per gallon of heating oil, 1,036 Btu per cubic foot of gas, 3,412 Btu per kWh). The efficiencies and COPs are our assumptions, not EIA's.

What that could mean for a year (our illustration). EIA expects the average U.S. oil-heated household to burn 402 gallons this winter. At 85% efficiency, that's about 47 million Btu of delivered heat. At the prices above:

  • Pennsylvania: oil about $2,431; gas about $723; heat pump about $977–$1,465 (COP 3.0 to 2.0).
  • New Jersey: oil about $2,565; gas about $683; heat pump about $1,114–$1,671.

Read these as rough comparisons, not a bill estimate:

  • Your house may use far more or less than 402 gallons. EIA's figure is a national average.
  • EIA's oil prices exclude taxes. The gas and electric figures are statewide averages that include fixed monthly charges, so a new gas customer's real cost per unit will differ.
  • Prices move. EIA's monthly Pennsylvania gas price was $14.21–$16.67 per Mcf from January to March 2026, and EIA expects heating oil spending to rise: "We expect a 21% increase in heating oil expenditures compared with last winter."
  • Heat pump efficiency drops in very cold weather, and your actual seasonal COP depends on the equipment and the house.
  • EIA itself cautions: "readers should not assume that switching to another fuel with lower energy expenditures… would necessarily result in lower expenditures for their household." Weigh the running cost against the up-front cost and any gas line charge.

Can you get gas? Line extension rules by utility

First check whether a gas main runs on your street. If not, the utility decides how much of the new main and service line it pays for, and you pay the rest. Each utility's tariff sets the formula.

Utility What the tariff says Source
PECO PECO invests in a new main and service "when the net present value (NPV) from a proposed project is greater than or equal to zero," using estimated base revenue over 40 years. If it's negative, you pay the difference. Conflict: PECO's Fees & Payment page instead says PECO invests "up to an amount equal to five times the additional estimated base annual revenue (EBAR)." The tariff is the filed rule, but ask PECO which test it applies to you. PECO Gas Tariff No. 6 (effective Oct 1, 2026); PECO Fees & Payment
PECO neighborhood pilot If a whole street wants gas, PECO's Neighborhood Gas Pilot Rider lets you pay your share as a fixed monthly bill charge or a lump sum. It needs two or more existing homes, a project cost of at least $15,000, and at least 20% of homes along the new main signing up before construction. It closes to new projects on Dec 31, 2029. PECO Gas Tariff No. 6
PGW (Philadelphia) PGW installs main and service "up to five times the anticipated annual Delivery Charge" at no cost; you pay any excess. PGW Gas Service Tariff (effective Sept 1, 2026)
UGI No contribution if the main extension is up to 150 feet, your service line is 150 feet or less, gas will be your primary heat, and the work doesn't cross private property or face unusual conditions. Otherwise UGI runs a cost test. UGI Gas Tariff, Rule 5.1
PSE&G (NJ) The "excess cost" is the extension cost minus "ten times the estimated average annual Distribution Revenue." PSE&G may provide "up to 50 feet of normal residential facilities" at no cost and waives the deposit if the excess is $500 or less. You can get refunds later if your actual use is higher than estimated. PSE&G Gas Tariff B.P.U.N.J. No. 17, section 3.7.1
South Jersey Gas Up to 200 feet of "normal residential facilities" at no cost; SJG waives the deposit "where the excess cost is $3,000 or less." SJG Tariff No. 14, section 4.3.1

Sources: utility tariffs and pages as of Oct 31, 2026. New Jersey's rule for these deposits and refunds is N.J.A.C. 14:3-8.11. We couldn't confirm which towns UGI serves in our five-county area.

Ask the utility for a written estimate of your contribution before you sign with a contractor. A short service line off an existing main may cost you nothing; a long main extension can change the math entirely.

Rebates for leaving oil

All checked Oct 31, 2026 on the program's own page or form. Programs can change or run out of money.

Pennsylvania (PECO and PGW)

Program Amount Key terms Source
PECO Natural Gas Heating Conversion $400 "Conversion of main or sole heating fuel source to natural gas." The form says the home must currently receive PECO residential gas service, the new equipment must "replace primary oil, propane or electric heating system," and the contractor must document what was removed. Apply within 90 days. Program term "January 1, 2026 through December 31, 2026." "Funds are limited and subject to availability." PECO rebates; conversion form
PECO gas boiler $250 (ENERGY STAR, 90%+ AFUE); $500 (ENERGY STAR+ combi boiler, 94%+ AFUE) Combi must be the primary system for space and water heating PECO rebates
PECO gas furnace $100 (95.0–96.9% AFUE); $400 (97%+ AFUE) ENERGY STAR; ECM fan Same
PECO electric heat pump Ducted: $200 or $300. Ductless: $150 or $300 By efficiency tier (SEER2/EER2/HSPF2) Same
PGW boiler $1,000 (94% AFUE); $1,400 for Affordable EnergySense customers First unit; additional units $700 PGW EnergySense
PGW furnace $400 (95% AFUE); $800 Affordable First unit Same

Our reading: PECO's $400 conversion rebate can be combined with its boiler or furnace rebate, since the rebate page lists them separately, but the form doesn't say so directly. Ask PECO before counting on both.

New Jersey (PSE&G and Atlantic City Electric)

Program Amount Key terms Source
PSE&G Building Decarbonization, full switch to cold-climate heat pumps "Lesser of $10,000 or 50% of the project cost of the largest system"; low- to moderate-income customers: lesser of $12,000 or 60% Heat pumps must be NEEP-listed cold-climate models sized to the home's full heating load; plus up to $2,000 for decommissioning, up to $2,000 for re-ducting if a Manual D calls for it, and "Additional $2,000 for every ccASHP needed to meet the heat load of the home." PSE&G Heating & Cooling ("View decarbonization rebates")
PSE&G Dual Heat (keep your boiler or furnace as backup) Lesser of $5,000 or 50% (LMI $6,000 or 60%) Integrated controls required; up to $1,500 per control unit (limit two) Same
PSE&G Hybrid Heat (partial) Lesser of $2,000 or 30% (LMI $3,000 or 40%) Same
ACE Residential Electrification "Up to $10,000 or 50% of project cost of the largest system"; moderate income: lesser of $12,000 or 60% Replaces gas, oil or propane equipment; 50% of costs up to $2,000 each for decommissioning and re-ducting; $2,000 per additional cold-climate unit; partial (dual-fuel) up to $5,000 or 50%. Equipment installed Jan. 1, 2025 to June 30, 2027; apply within 90 days ACE Residential Electrification application
ACE cold-climate heat pump (standard rebate) $2,000 Limited-time amount from April 1, 2026 through June 30, 2027 ACE HVAC Efficiency Program

PSE&G's eligibility: you must "Be a current PSE&G residential electric customer or be a current Butler Electric customer who receives PSE&G residential gas service," own a one- to four-unit home, and use a participating contractor, who takes the rebate off your invoice. PSE&G says "This program is subject to change, including termination, without prior notice." Its page shows no end date. PSE&G also offers up to $25,000 in interest-free on-bill repayment for HVAC work, and says decarbonization projects may qualify for "an additional $50,000." ACE also requires a participating contractor and says rebates are "subject to available program funds."

If you switch to gas in New Jersey: PSE&G's gas boiler and furnace rebates say "Must replace a non-condensing unit" and "Condensing to condensing replacement not eligible." South Jersey Gas's on-bill repayment requires "Upgrading from a standard-efficiency non-condensing furnace or boiler to a high-efficiency condensing furnace or boiler." Neither says whether an old oil boiler or furnace counts, so ask the utility before you count on them.

Federal tax credit: the 25C credit for heat pumps and efficient boilers ended for improvements made after December 31, 2025 (IRS). Our federal tax credit guide explains what you can still claim for 2025. For all PECO and PPL rebates, see our rebate guide.

What happens to the oil tank

Whatever you switch to, the old tank has to be dealt with. Our oil tank removal and replacement guide covers costs and rules in detail; here are the basics.

  • Pennsylvania: the state Department of Environmental Protection says "Home heating oil tanks are not regulated" under its storage tank program. If a buried home heating oil tank (3,000 gallons or less) leaked, DEP's Underground Heating Oil Tank Cleanup Reimbursement Program can repay eligible cleanup costs after a $1,000 deductible, up to $4,000 (PA DEP).
  • Philadelphia: L&I requires a building permit "to install or remove hazardous material tanks" ($158 per tank plus surcharges). The page doesn't say whether a home heating oil tank counts, so ask L&I or your contractor (L&I).
  • New Jersey: removing or abandoning a residential heating oil tank needs a demolition permit, and the local fire subcode official handles plan review and inspection. For underground tanks, "Only the Department of Environmental Protection (NJ DEP) certified individuals and firms can perform services" on them. NJDEP "strongly recommends the removal of all out-of-service underground heating oil tanks even when there is no evidence the tank has leaked" (NJ DCA Bulletin 95-1B). If a tank has leaked, N.J.A.C. 7:26F-2.1 requires you to notify NJDEP and hire certified professionals (N.J.A.C. 7:26F-2.1).
  • Insurance in New Jersey: the Department of Banking and Insurance says "Most homeowners policies exclude pollution liability caused by oil tanks," with an option to buy back coverage (NJ DOBI). Check your own policy.

PSE&G and ACE pay up to $2,000 toward decommissioning when you switch fully to heat pumps (see above).

Permits

Where What applies Source
Philadelphia A Mechanical Permit covers heating, ductwork and "Equipment and piping that use natural gas." In one- or two-family homes the appliance fee is $69. L&I's page also says "Boiler installations are regulated by the PA Department of Labor and Industry," but Pennsylvania's boiler law doesn't apply to "Boilers located in single-family dwellings, multiunit dwellings with four or fewer units." So we couldn't confirm what permit a home boiler swap needs in Philadelphia. Ask L&I. L&I Mechanical Permit; PA Boiler and Unfired Pressure Vessel Law, section 5
Pennsylvania suburbs A permit is required to "install … convert or replace an electrical, gas, mechanical or plumbing system regulated by the Uniform Construction Code." Fees are set locally. 34 Pa. Code §403.62
New Jersey Replacing "existing low-pressure boilers, warm air furnaces" with new appliances "of like capacity" is minor work. A fuel switch or a new heat pump system may not fit that description; ask your construction office. Tank removal needs its own demolition permit (above). N.J.A.C. 5:23-2.17A

Our furnace guide has more detail on Philadelphia mechanical and electrical permit fees.

Hiring a contractor in Pennsylvania and New Jersey

Pennsylvania. The Home Improvement Consumer Protection Act covers heating work. Contractors who did $5,000 or more in home improvements in the previous year must register with the Attorney General. For a job over $500, the contract must be in writing and include the registration number, the total price and your right to cancel within three business days. On contracts over $5,000, the deposit can't exceed one-third of the price, plus the cost of special-order materials. Pennsylvania has "no licensure or certification requirements for most construction contractors" (PA Labor & Industry), but Philadelphia's mechanical permit page says "A licensed contractor must perform all work."

New Jersey. Home improvement contracts over $500 must be in writing, and you can cancel "before midnight of the third business day" after you receive a copy. New Jersey's HVACR licensing law says "A person shall not work as a Master HVACR contractor … unless licensed," with a narrow exemption for owners working on their own single-family home. Our sewer line guide covers both states' contract rules in more detail.

What to ask before you sign

  1. Gas: Has the utility confirmed in writing that I can get gas, and what my line extension contribution is? Who handles the meter application?
  2. Heat pump: Will you do a Manual J load calculation for the whole house? Is the system sized to cover my full heating load, or is it a hybrid? Are the units NEEP-listed cold-climate models (required for PSE&G and ACE's larger rebates)?
  3. Radiators and ducts: If I have a boiler, what happens to the radiators? Do I need ductwork or ductless heads in each room?
  4. Venting: Does the chimney need a liner, or will the new equipment vent through the wall?
  5. Electrical: Does my panel need an upgrade?
  6. Tank: Is tank removal or abandonment in your price? Who pulls that permit? For a buried tank in New Jersey, are you NJDEP-certified?
  7. Rebates: Are you a participating contractor for my utility's program? Will the rebate come off the invoice, and who files the paperwork within the deadline?
  8. Permits and registration: Which permits will you pull? What's your Pennsylvania HIC registration number or New Jersey registration and HVACR license number?
  9. Itemized price: Can you break out equipment, labor, gas piping, liner, electrical, tank work and permits?

When to do it

The best time is before your system fails. HomeGuide says that for furnaces, "Planning replacement during spring or early fall typically provides quicker service and potentially better pricing than during peak winter season." A failure in January leaves you choosing fast, often a like-for-like oil replacement. A gas line extension or a whole-home heat pump design takes longer. Program deadlines matter too: PECO's conversion rebate term ends December 31, 2026, ACE's electrification rebates cover installations through June 30, 2027, and PSE&G can change its program without notice.

FAQ

Is converting from oil to gas worth it? On running costs alone, gas was far cheaper than oil per unit of heat at late October 2026 prices (our arithmetic above). The answer for your house depends on whether gas is on your street, what the utility charges to extend it, and how many years you'll stay. EIA cautions that a cheaper fuel doesn't guarantee lower total spending.

Can a heat pump heat an old Bucks County farmhouse? Cold-climate heat pumps are designed to keep heating in freezing weather. PSE&G's and ACE's full-switch rebates require NEEP-listed cold-climate models with a COP above 1.75 at 5°F. Leaky, uninsulated houses need bigger systems. A Manual J load calculation tells you what yours needs. Many owners choose a hybrid that keeps the boiler for the coldest days.

Does PECO pay to run a gas line to my house? Up to a point. PECO's tariff uses a net present value test on your expected gas revenue; you pay any shortfall. Its web page describes a five-times-revenue test instead. Ask PECO for a written estimate.

Can I get PSE&G's $10,000 rebate if PSE&G isn't my utility? No. PSE&G's program requires you to be a current PSE&G residential electric customer (or a Butler Electric customer with PSE&G gas). ACE customers have a similar program.

Do I have to remove my oil tank? In Pennsylvania, home heating oil tanks aren't regulated by DEP. In New Jersey, removal or abandonment needs a permit, and NJDEP strongly recommends removing out-of-service buried tanks. Buyers, lenders and insurers may ask about the tank either way.

Thinking about a project?

We don't offer quotes or connect homeowners with contractors. Get at least two written, itemized quotes from registered contractors and compare them with the questions above. The costs, rules and rebates in this guide come from the sources listed below. Learn how we make money.

Sources

All checked Oct 31, 2026.