At US average fuel prices the cheapest way to heat a house is a natural gas furnace, at about $0.016 per 1,000 BTU delivered. An air-source heat pump costs about $0.019 and is the cheapest option in the 10 states where mild winters meet moderate electricity prices. Electric resistance heat — baseboard, ceramic or oil-filled, they are identical — costs about $0.054, roughly 3.5x gas.
The only fair way to compare heating fuels is cost per 1,000 BTU delivered — not cost per unit of fuel. This accounts for furnace efficiency, heat pump COP, and fuel energy content. The monthly column models one winter month for a 2,000 sq ft average-insulated home in a 35°F average outdoor temperature — about 10.8 million BTU of delivered heat. A smaller, better-sealed house in a milder month costs proportionally less; EIA’s national forecast average across all gas-heated homes is lower than the figure here because it includes far milder climates and smaller homes.
The Department of Energy's guidance is specific: turning your thermostat back 7–10°F for 8 hours a day saves about 10% a year on heating and cooling. That is one number for the whole year, not 3% per degree per hour — a claim that, taken literally, would have a 10-hour setback saving more than 100% of your bill. Set it back while you sleep and while the house is empty, and schedule the warm-up half an hour before you need it.
Heating one occupied room instead of the whole house is a real saving, but only against the right baseline. A 1,500 W heater costs about $0.28 an hour at 18.44¢/kWh. Heating our modelled 2,000 sq ft home costs about $0.23 an hour on average with gas, and about $0.81 an hour with electric baseboard. So against baseboard, oil or propane, zone heating wins easily. Against natural gas the heater alone can cost more than the whole furnace averages — the saving there comes from the setback, not the heater.
ENERGY STAR's own methodology puts the saving from air sealing plus attic, floor and crawlspace insulation together at an average of 15% of heating and cooling costs (about 11% of total household energy) — a whole-house package, not attic insulation alone. It is still the most durable saving available, because it lowers every future bill regardless of what you heat with, but note that the federal tax credit that used to cover 30% of insulation work (IRC §25C) ended for work placed in service after 31 December 2025.
ENERGY STAR certified smart thermostats save about 8% of heating and cooling bills, roughly $50 a year — not the $140–$180 often advertised. At $150–$250 that is a three- to five-year payback; a $25–$50 programmable thermostat that simply runs a schedule pays for itself in a single season and captures most of the same saving.
A heat pump at seasonal COP 2.8 cuts the cost of delivered heat by about 64% against electric resistance, and it beats oil and propane per BTU as well. Against a 92% AFUE gas furnace at US average prices it costs more to run, so the case there is about comfort, cooling and emissions rather than the bill. Budget the full installed price: the §25C and §25D federal credits both terminated for property placed in service after 31 December 2025.