Propane vs. Natural Gas Furnace in Minnesota: Costs, Pros, and Cons

About 400,000 Minnesota households heat with propane—predominantly in rural areas where natural gas pipelines don't reach. If you're on propane, you've probably noticed that your heating bills run significantly higher than your city-dwelling neighbors with natural gas. But propane isn't always the villain it's made out to be, and for many rural Minnesota homeowners, the choice between propane and natural gas isn't actually a choice at all. Here's an honest breakdown of both fuels for Minnesota homeowners.

Who Uses Propane vs. Natural Gas in Minnesota?

Natural gas is primarily available in:

• The Twin Cities metro and inner suburbs
• Most cities over 10,000 population (Rochester, Duluth, St. Cloud, Mankato)
• Many larger towns served by CenterPoint Energy or other utilities

Propane is typically the primary heating fuel in:

• Rural areas across Greater Minnesota
• Smaller communities without gas infrastructure
• Cabins, lake homes, and hobby farms
• New construction in areas where gas mains haven't been extended

If you're on propane and wondering about switching to natural gas: the switch requires a gas main to reach your property, a service line installed by the utility, and conversion of your appliances. In urban and suburban areas, this is feasible. In rural Minnesota, it's often not an option.

Propane vs. Natural Gas: Cost Comparison

This is where propane gets a bad reputation—and deservedly so, to some extent. Here's a realistic comparison:

• Natural gas price: Approximately $0.80–$1.20 per therm in Minnesota (2025-2026)
• Propane price: Approximately $1.80–$2.80 per gallon in Minnesota (varies significantly by supplier and region)
• Energy equivalence: One gallon of propane = approximately 0.91 therms of natural gas in energy content

Effective cost comparison per therm-equivalent:

• Natural gas: $0.80–$1.20/therm
• Propane at $2.00/gal: $2.20/therm-equivalent
• Propane at $2.50/gal: $2.75/therm-equivalent

For a typical Minnesota home using 800–1,200 therms of heat per year, the annual cost difference is $1,000–$1,800 more on propane vs. natural gas. Over the life of a furnace (18-22 years), that's a very significant sum.

Why High-Efficiency Furnaces Matter Even More for Propane Users

Because propane costs 2-3x more per BTU than natural gas, every percentage point of furnace efficiency translates to real money saved. The math on upgrading from an 80% to 96% AFUE furnace:

• Natural gas user: Saves ~$200–$350/year
• Propane user: Saves ~$450–$800/year

For propane homeowners, the payback period on a high-efficiency furnace upgrade is often 3–5 years instead of 5–8 years. See our variable-speed vs. single-stage guide and check current Minnesota rebates and tax credits to maximize your savings.

Furnace Equipment: Are Propane Furnaces Different?

The good news: the same Goodman furnaces we sell work with both natural gas and propane. The difference is in the gas orifices—propane requires smaller orifices because it delivers more BTUs per cubic foot than natural gas.

• Most furnaces ship from the factory configured for natural gas
• A propane conversion kit (usually $30–$80 in parts) converts the orifices and regulator spring
• This conversion should be done by your HVAC installer as part of the installation process
• Always verify with your installer that the conversion was completed properly before lighting the furnace

When ordering from Furnace Direct, let us know you're on propane. We can help ensure you have the right conversion kit for your specific unit.

Propane Tank Considerations

If you're on propane, you're likely familiar with your tank situation—but for those new to propane heating:

• Tank ownership: You can own your tank (upfront cost ~$800–$2,000) or lease from your propane supplier. Owning gives you the freedom to shop prices from multiple suppliers
• Pre-buy programs: Many Minnesota propane suppliers offer pre-buy at fixed prices in summer. In years with high winter demand, this can save significant money
• Keep it topped off: Running out of propane in Minnesota winter is a serious problem. Monitor levels and don't let the tank drop below 20%
• Tank size: A 500-gallon tank is common for homes; 1,000-gallon for homes with propane for multiple appliances

Propane vs. Electric Alternatives

Some rural Minnesota homeowners consider switching from propane to electric heat pumps or electric furnaces. A few considerations:

• Cold-climate heat pumps can be effective down to -15°F but lose efficiency in extreme cold
• Propane typically beats straight electric resistance heat on cost in Minnesota
• A hybrid propane + heat pump system can offer the best of both: heat pump efficiency during moderate cold, propane backup for extreme cold
• Rural electric rates and grid reliability vary—some areas experience outages in winter storms where propane is more reliable

See our furnace vs. heat pump comparison and our mini-split vs. furnace guide.

Bottom Line for Minnesota Propane Users

If you're on propane in rural Minnesota, you likely don't have a choice about the fuel. Your best moves are:

1. Upgrade to 96% AFUE furnace—the efficiency payback is larger than for gas users
2. Air seal and insulate your home thoroughly—see our insulation guide
3. Own your tank so you can shop multiple suppliers
4. Consider pre-buy programs in summer

Furnace Direct sells Goodman propane-compatible furnaces at factory-direct pricing. Browse our furnace collection and reach out to ensure your unit ships with the right propane conversion components.