Alaska Home Heating Costs: How to Compare Fuels and Cut Your Bill
The fairest way to compare heating costs is by the price of delivered heat, usually expressed as dollars per million BTU (British thermal units). To calculate it, divide your fuel price by the heat content of one unit of fuel, adjust for your heater's efficiency, and multiply by one million. This guide gives you the numbers to do that for heating oil, natural gas, propane, wood and electricity, plus practical ways Alaskans reduce heating bills.
How Alaskans heat their homes
- Natural gas is common in Anchorage, the Mat-Su and parts of the Kenai Peninsula, where a gas utility serves Southcentral Alaska. It's usually among the lowest-cost options where available.
- Heating oil (fuel oil #1 and #2) is widely used in Fairbanks, Southeast and rural Alaska. #1 is common in very cold areas because it resists gelling.
- Propane serves homes beyond gas lines and is used for cooking and water heating.
- Wood is a primary or supplemental heat source for many households, especially in the Interior.
- Electricity is used for baseboard heat and, increasingly, heat pumps. Heat pumps are especially popular in parts of Southeast Alaska with hydroelectric power and mild winters.
- Direct-vent oil or kerosene heaters, often called by brand names like Toyo or Monitor, are common supplemental heaters in Alaska homes.
The cost-per-million-BTU formula
Cost per million BTU = price per unit ÷ (BTU per unit × efficiency) × 1,000,000
Use your actual local price and your heater's efficiency. Typical heat contents are below; efficiency varies widely by appliance age and maintenance.
| Fuel | Unit | Approx. BTU per unit | Typical efficiency |
|---|---|---|---|
| Heating oil (#2) | Gallon | About 138,500 | About 80–90% (newer boilers/furnaces) |
| Heating oil (#1 / kerosene) | Gallon | About 135,000 | About 80–90% (direct-vent heaters) |
| Propane | Gallon | About 91,500 | About 80–95% |
| Natural gas | Therm | 100,000 | About 80–97% |
| Electric resistance | kWh | 3,412 | 100% |
| Electric heat pump | kWh | 3,412 | Often 200–300%+ (varies with outdoor temperature) |
| Dry birch firewood | Cord | Roughly 20 million or more | About 50–75% (modern EPA-certified stoves at the high end) |
| Dry spruce firewood | Cord | Roughly 15–18 million | About 50–75% |
Heat contents are standard approximate values; firewood varies greatly with species, moisture and how a "cord" is measured. Wet wood delivers far less heat.
Worked example (hypothetical prices)
These prices are made up purely to show the math. Plug in your own.
- Heating oil at $4.50/gallon, 85% efficient: 4.50 ÷ (138,500 × 0.85) × 1,000,000 ≈ $38 per million BTU
- Electric resistance at $0.25/kWh: 0.25 ÷ (3,412 × 1.00) × 1,000,000 ≈ $73 per million BTU
- Heat pump at $0.25/kWh with an average efficiency of 250%: 0.25 ÷ (3,412 × 2.5) × 1,000,000 ≈ $29 per million BTU
The example shows why heat pumps can beat oil where electricity is moderately priced and winters are mild, and why resistance electric heat is expensive. In very cold climates, heat pump efficiency drops at low temperatures, so many homes keep a backup heat source.
Ways to lower your heating bill
No-cost and low-cost steps
- Lower the thermostat at night and when away; a programmable thermostat makes this automatic.
- Seal drafts around doors, windows and attic hatches with weatherstripping and caulk.
- Use window insulation film or interior storm panels on older windows.
- Keep vents and heaters unobstructed, and keep outdoor intake and exhaust vents clear of snow.
- Have your furnace, boiler or Toyo-style heater serviced yearly. Dirty nozzles and filters waste fuel.
- For wood heat, burn only well-seasoned wood. Splitting and stacking wood a year ahead pays off in both heat and safety.
Bigger investments
- Air sealing and insulation, especially in the attic, usually give the best return.
- Get an energy audit to find where heat is escaping. Ask the Alaska Housing Finance Corporation (AHFC) about current energy programs and rater resources.
- Upgrade old heating equipment when it's near the end of its life rather than after it fails in January.
- Consider a heat pump if your local electric rates and climate make the math work. Federal tax incentives for energy-efficient home improvements have changed in recent years, so check current IRS guidance before counting on one.
Help paying for heat
- Heating assistance: The State of Alaska runs a heating assistance program for eligible low-income households, funded partly through the federal Low Income Home Energy Assistance Program (LIHEAP). Some tribal organizations run their own programs.
- Weatherization: AHFC funds weatherization services for income-eligible households through regional providers.
- Power Cost Equalization (PCE): In many rural communities, the state's PCE program lowers residential electric rates for a set amount of monthly usage.
- Budget billing: Many utilities and fuel dealers offer level monthly payments, which smooth out winter spikes.
- Nonprofits and churches in some communities offer emergency fuel help. Call 211 (Alaska 2-1-1) to find local resources.
Budgeting for heat
Look at the last 12 months of fuel or utility bills, total them, and divide by 12. That's your monthly heating sinking fund. If you buy heating oil or propane by delivery, keep enough in the fund to cover a full tank before the coldest months. Many Alaskans use part of their PFD in the fall for this; see our PFD guide.
Safety first: Install carbon monoxide alarms, never use outdoor-only heaters or generators indoors, and keep combustibles away from stoves and heaters. Cold-weather house fires and CO poisoning are serious risks in Alaska.