Road Fuel vs Home Heating Oil: Kerosene, Diesel & Gas Price Comparison
Millions of homes across the UK, Ireland, France, Germany, and the rural United States heat with oil rather than mains gas — and for these households, fuel pricing is not just about what they pay at the forecourt but what they pay per delivery of heating kerosene or gas oil. This guide compares the true cost of heating with oil, road diesel, natural gas, and LPG, and explains when a fuel switch makes financial and practical sense.
For context on why road diesel and heating oil diverge so much in price despite being chemically similar, see the guide on what makes up the price at the pump. For live road fuel prices globally, use the fuel price explorer.
Types of heating fuel
| Fuel | UK name | EU/US name | Typical use |
|---|---|---|---|
| Heating kerosene | 28-second oil, Class C2 | Home heating oil, No. 2 fuel oil (US) | Domestic oil-fired central heating boilers |
| Gas oil | 35-second oil, red diesel (road use prohibited) | Heating gas oil, domestic fuel oil | Agricultural, industrial, some older domestic boilers |
| Road diesel (ULSD) | White diesel | Road diesel, automotive diesel | Road vehicles; technically works in oil boilers but road-duty paid |
| LPG (propane/butane) | LPG, calor gas | LPG, propane | Off-grid heating and cooking, rural areas |
| Natural gas (mains) | Mains gas | Utility gas, piped gas | Boilers, cookers where gas grid available |
Heating kerosene (C2) is lighter than road diesel — its distillation range is closer to jet fuel — and burns cleanly in domestic boilers. Gas oil (red diesel) is closer to road diesel but dyed red with a marker dye (Solvent Red 26 in the EU) to indicate it has not paid full road excise duty. Using red diesel in a road vehicle is a serious tax offence in the UK and EU. For more on these fuel types, see our glossary entry on gas oil (gasoil).
Price comparison: UK 2026 indicative rates
| Fuel | Price per litre (approx.) | Price per kWh (approx.) | Road duty included? |
|---|---|---|---|
| Road diesel (ULSD) | ~148p/l | ~13.3p/kWh | Yes (57.95p/l duty) |
| Heating kerosene (C2) | ~82–90p/l (bulk 500l+) | ~7.7–8.4p/kWh | No duty |
| LPG (propane, bulk tank) | ~75–85p/l | ~11.5–13.0p/kWh | No road duty; reduced duty applies |
| Natural gas (mains, Ofgem price cap) | N/A (sold by kWh) | ~6.0–7.5p/kWh | No duty; VAT 5% |
| Electricity (standard tariff) | N/A | ~27–30p/kWh | No duty; VAT 5% |
Road diesel carries 57.95p/l fuel duty plus VAT on the total price. Heating kerosene carries no duty and VAT at only 5% (versus 20% on road fuel). The product itself — pre-duty, pre-tax — costs roughly similar amounts to manufacture. The entire gap is tax policy.
Energy content: comparing fairly
To compare fuels fairly, price per unit of energy (pence per kWh) is more useful than price per litre, since different fuels have different energy densities:
| Fuel | Energy content (net calorific value) | Notes |
|---|---|---|
| Heating kerosene (C2) | ~10.35 kWh/litre | Higher CV than gas oil |
| Gas oil / red diesel | ~10.0 kWh/litre | Slightly lower CV than kerosene |
| Road diesel (ULSD) | ~10.0 kWh/litre | Similar to gas oil |
| LPG (propane) | ~6.5 kWh/litre (liquid) | Lower volume density than oil |
| Natural gas | ~10.3 kWh/m³ (approx. UK standard) | Variable; depends on gas composition |
Why heating oil isn't taxed like road fuel
Road fuel excise duty exists to fund road infrastructure, price the external costs of road transport (congestion, pollution, accidents), and raise general government revenue. These justifications do not apply to domestic heating: a home boiler does not use roads, contributes to urban air quality problems only indirectly, and home heating is an essential need that cannot be easily reduced or substituted, especially in rural off-grid homes.
Heavy taxation of heating oil would have strongly regressive effects — hitting rural and lower-income households hardest, since these are more likely to be off the gas grid and dependent on oil. This is politically sensitive in the UK, Ireland, France, Germany, and the US. For background on how taxes shape fuel prices internationally, see our guide to highest fuel tax countries.
Boiler efficiency: the conversion loss
The price-per-kWh comparison above shows the energy in the fuel purchased — but the heat delivered to the home depends on boiler efficiency:
- Modern condensing oil boiler: 92–95% efficiency at typical operating conditions
- Older non-condensing oil boiler: 70–80% efficiency — significant energy waste
- Modern condensing gas boiler: 90–95% efficiency
- LPG boiler: 88–94% efficiency
- Air source heat pump: 250–350% efficiency (COP 2.5–3.5) — delivers 2.5–3.5 kWh of heat per kWh of electricity consumed
At UK 2026 electricity prices (~28p/kWh) and heat pump COP of 3.0, the effective heat cost via heat pump is ~9.3p/kWh — comparable to heating kerosene in a modern condensing boiler (~8.5p/kWh delivered). The comparison shifts further toward heat pumps as electricity prices fall or carbon pricing is added to heating fuels.
Carbon emissions comparison
| Fuel | CO₂ per kWh heat delivered (approx.) | vs gas baseline |
|---|---|---|
| Heating oil (condensing boiler, 93% eff.) | ~0.27 kg CO₂/kWh | +15% |
| Natural gas (condensing boiler, 93% eff.) | ~0.22 kg CO₂/kWh | baseline |
| LPG (propane, 92% eff.) | ~0.24 kg CO₂/kWh | +9% |
| Air source heat pump (COP 3.0, UK grid 2026) | ~0.08–0.10 kg CO₂/kWh | −55 to −65% |
| Wood pellet boiler (sustainable source) | ~0.03 kg CO₂/kWh | −86% |
When switching fuel type makes financial sense
For households currently on heating oil, the financial case for switching depends on:
- Heat pump economics: High upfront cost (£8,000–18,000 installed in UK) partially offset by Boiler Upgrade Scheme grants (£7,500 in 2026). Running cost comparable to oil at current prices if COP ≥ 3.
- Gas connection: If mains gas is nearby, a connection can cost £1,500–4,000 + boiler. At current UK gas prices (~6–7.5p/kWh delivered), gas is cheaper per kWh than oil.
- LPG: Convenient for off-grid properties but typically more expensive per kWh than oil. Mainly viable where storage tank is already installed.
- Biomass (wood pellets): Near-zero carbon; competitive economics if pellet prices remain below ~12–14p/kWh. Higher upfront cost and fuel storage requirements.
For the EV equivalent of this analysis (road transport electrification economics), see our guide to EV running costs.
Frequently asked questions
-
Is home heating oil the same as diesel?
- No. Home heating kerosene (C2 oil) is chemically closer to jet fuel — lighter than road diesel. Gas oil (red diesel) is chemically closer to road diesel. Road diesel (ULSD) has stricter sulfur specifications. The key practical difference is tax: road diesel carries full fuel duty (~58p/l in the UK); heating oil carries none. Using red diesel in a road vehicle is a tax offence.
-
Is heating oil cheaper than natural gas for home heating?
- In the UK in 2026, mains gas (~6–7.5p/kWh delivered) is typically cheaper than heating oil (~8–9p/kWh delivered in a modern condensing boiler). However, in rural areas off the gas grid, heating oil is often the only practical alternative. The comparison varies by year and market — gas prices were much higher than oil in 2022–2023.
-
Why is heating oil not taxed like road fuel?
- Road fuel excise duties fund road infrastructure and price transport externalities — justifications that don't apply to domestic heating. Home heating is also an essential need that cannot easily be reduced or substituted, particularly in rural off-grid homes. Heavy heating oil taxation would be strongly regressive, hitting the least well-off in the most remote areas hardest.