Natural Gas vs. Propane Furnace Costs in Minnesota: Full Comparison

Choosing Your Fuel: A Data-Driven Look

Minnesota has approximately 1.2 million households—and while most metro-area homes are served by natural gas, a significant portion of the state's housing stock relies on propane, particularly in rural areas, lake communities, and suburbs that natural gas infrastructure hasn't reached. If you're building a new home, buying a rural property, or considering a fuel switch, the natural gas versus propane comparison deserves a careful look. This guide breaks down the real costs and trade-offs for Minnesota homeowners in 2026-2025.

Fuel Cost Comparison: Natural Gas vs. Propane

The primary ongoing cost difference between natural gas and propane is fuel price. In Minnesota:

• Natural gas: Approximately $0.85-1.20 per therm (100,000 BTU) for residential customers—varies by utility and season
• Propane: Approximately $1.50-2.50 per gallon, equivalent to approximately $1.65-2.75 per therm (one gallon of propane contains approximately 91,500 BTU)

In a typical Minnesota home burning 800-1,200 therms of heat per year, this fuel cost difference translates to:

• Natural gas annual heating cost: $800-1,400
• Propane annual heating cost: $1,400-3,300

The gap is significant—often $600-1,900 per year more for propane homeowners. Over 15-20 years of furnace life, this fuel cost difference dwarfs equipment costs.

Should You Switch from Propane to Natural Gas?

Natural gas availability is expanding in Minnesota, but extension to rural areas remains expensive. Consider switching if:

• Natural gas is available at your property line—connection fees are typically $500-2,000
• You're planning to stay in the home long-term—the fuel savings pay back connection costs quickly
• You have a propane furnace approaching replacement age—convert at replacement time to minimize costs

Converting from propane to natural gas when replacing your furnace requires a new gas line connection, meter installation, and potentially new gas piping inside—add $1,000-3,000 to the project cost. Even so, the annual savings often pay this back in 1-3 years. Learn more about propane vs. natural gas furnaces in Minnesota for a detailed comparison.

Equipment Costs: Are They the Same?

Goodman and other major furnace manufacturers make both natural gas and propane versions of their equipment. The equipment cost is essentially identical—Goodman furnaces are factory-set for natural gas but come with a propane conversion kit or can be ordered as LP models. The conversion kit adds $40-100 to the project cost.

From Furnace Direct:

• Goodman GMSS96 96% AFUE two-stage (natural gas or propane): $900-1,100 delivered
• Goodman GMVC96 variable-speed (natural gas or propane): $1,200-1,500 delivered

Propane Tank Considerations

Propane homeowners also face tank costs that natural gas customers don't:

• Tank rental: $100-200/year from the propane supplier, often required if you use their fuel
• Tank ownership: Purchase price $400-2,000 depending on size; provides freedom to shop multiple suppliers
• Tank sizing: A typical Minnesota home uses 600-1,200 gallons of propane per heating season—a 500-gallon tank is minimum, 1,000-gallon preferred

Dual-Fuel Systems: A Hybrid Option

Some Minnesota propane homeowners install dual-fuel systems—a heat pump as the primary heating source with a propane furnace as backup for extreme cold. When outdoor temperatures are above 20-25°F, the heat pump runs efficiently. When temperatures drop below that threshold—which happens regularly in Minnesota—the propane furnace takes over.

This approach reduces propane consumption significantly (the heat pump handles most of the heating season) while avoiding the infrastructure challenge of switching to natural gas entirely. The trade-off is higher equipment cost and added complexity.

Making the Right Decision for Your Property

For rural and lake properties without natural gas access, propane will likely remain the fuel choice—the infrastructure cost of extending natural gas often doesn't pencil out except for very dense developments. Focus on maximizing furnace efficiency (96% AFUE) to minimize propane consumption, and consider tank ownership to maintain supplier flexibility.

For properties where natural gas is available or soon will be, switching at furnace replacement time is almost always the right financial decision. The fuel savings over the furnace's 20-year life vastly outweigh the conversion costs.

Learn more about comparing furnace models and browse Furnace Direct's factory-direct Goodman furnace inventory for both natural gas and propane configurations available for same-day delivery throughout Minnesota.