Breaking down the respective costs of various mainstream home energy sources, natural gas will be the cheapest to use in 2007, according to the Department of Energy's (DOE) Office of Energy Efficiency and Renewable Energy. The DOE forecast of projected costs of natural gas, heating oil, electric, propane and kerosene energy use was published in the March 21 Federal Register.

According to DOE, one million Btus of natural gas will cost an estimated $12.18 this year -- while the same amount of electricity will cost families more than twice as much ($31.21) on average. Natural gas will also cost less than heating oil ($16.01), kerosene ($19.48) and propane ($20.47).

"These cost savings can add up quickly, especially for home heating and water heating," said Tom Moskitis, American Gas Association (AGA) managing director of external affairs. "For water heating, an average household using a conventional storage type water heater would save around $220 per year in energy costs by using a natural gas water heater instead of a similar electric unit. That means the natural gas water heater can pay for itself after just a few years -- and save a consumer $2,000 in energy costs over the nine-year life of the appliance."

According to AGA analysis of the DOE's cost projections, the least expensive way to heat a home in 2007 is with a high-efficiency (94%) natural gas furnace. The association said this option will cost consumers an estimated $801 in 2007, compared with $1,930 for the most expensive home-heating option -- an electric resistance system (such as electric warm air furnace heating).

For the full year 2007, AGA found that an 84%-efficient oil furnace would cost a consumer $946 while a 94%-efficient propane furnace would cost $1,184. An electric 7.7 HSPF heat pump would come the closest to the natural gas option, costing customers $814 in 2007.

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