Natural gas consists of several naturally-occurring gasses like methane. Propane comes from natural gas. When put under pressure, it liquefies. This makes it easy to transport to homes and businesses. While some homes use natural gas, others use propane for heat and appliance power.
Based on a May, 2010 fuel supplier survey by Nicor Incorporated, Natural gas averages about £2.60/MMbtu. The same survey prices propane at £19.00/MMbtu, showing that judging strictly on cost, natural gas ranks lowest.
Natural gas prices affect propane prices, says the U.S. Department of Energy. Since propane comes from natural gas and crude oil, the costs of natural gas and crude oil affect it's price. Other things affect propane costs, like seasonal demand to fuel barbecue grills and other seasonal applications like hot tub use.
Based on the average cost per MMbtu, propane should cost a homeowner about 700 per cent more than natural gas to heat a house. Propane furnaces, however, run much more efficiently than natural gas heaters and only cost about 30 per cent more than natural gas over the course of a year. Based on a 2009 estimate by Energy Kinetics, the average cost to heat a home with propane costs £2,007. Heating a home with natural gas costs £1,227.
Both natural gas and propane provide excellent efficiency and usually cost less than electricity, according to Nicor Inc. and Gault Energy. Propane is more portable because it comes in a liquid form and people can buy it buy the tank. Natural gas, however, generally comes with an even lower price tag than propane.
Not all homes have access to natural gas. Towns without natural gas hookups, or those living in the country must choose between electric or propane energy. Although natural gas typically costs less, those without the option find propane a nice alternative.