Propane vs Natural Gas Furnace: An Indiana Homeowner's Honest Guide

Two winters ago, a family in Westfield called us in a panic. Their propane furnace died on the coldest night of the year, and the tank outside was nearly empty. The propane company said the drifted snow on their road made delivery impossible for at least three days. They asked us, 'Should we have gone with natural gas instead?' It's a question we hear all the time from homeowners in Indianapolis, Carmel, Fishers, and the towns around them. The propane vs natural gas furnace decision isn't just about the equipment—it's about how your home gets fuel, how much you'll pay over ten years, and how much hassle you're willing to deal with when the temperature drops.

We've installed and converted furnaces across central Indiana for long enough to see the real stories behind the fuel choice. So let's break it down without the sales pitch.

The Real Cost of Fuel: Gallons vs Therms

Propane and natural gas furnaces work basically the same way. Both use a burner, a heat exchanger, and a blower. The difference is the fuel and the burner orifice size. A propane furnace vs natural gas furnace uses a different orifice and a different regulator pressure. That's why you can't just hook up the wrong fuel without a conversion (more on that later).

The energy math matters. One gallon of propane has about 91,500 BTU. One therm of natural gas has about 100,000 BTU. So a gallon of propane is almost the same energy as a therm of natural gas. But you pay for propane by the gallon and natural gas by the therm. Prices can be wildly different.

Last winter, some propane customers in Greenwood paid over $3.50 a gallon delivered. Meanwhile, natural gas customers in Indianapolis (served by Citizens Energy Group) paid around $0.80 per therm. That's $3.83 per 100,000 BTU for propane versus $0.80 for natural gas. Even if propane drops to $2.50 a gallon, that's still $2.73 per 100,000 BTU—three times the cost of natural gas. And propane prices bounce around with oil markets, plus you have delivery fees, tank rental, and sometimes a 'hazmat' surcharge. Natural gas rates are regulated and more stable, and you don't worry about a truck showing up.

That doesn't mean propane is always bad. If you have no gas main on your street, it's often your only option besides electricity or a heat pump. But you should go in with your eyes open about the operating cost.

Your Property and Fuel Delivery: Gas Line or Propane Tank?

The biggest factor in the propane vs natural gas furnace choice is what's already buried under your yard.

If you live in Indianapolis proper or in many parts of Carmel, Fishers, or Greenwood, there's a good chance a natural gas main runs down your street. That doesn't mean you have a meter, though. Some older homes never connected. If there's a main, you can pay for a gas line installation from the street to your house. We do that work often, and it involves calling 811 to locate utilities, trenching a line, and installing a meter. In Indiana, frost depth is 30 to 36 inches, so the trench has to be deep enough. Marion County and surrounding counties (Hamilton, Hendricks, Johnson) have different permit requirements and inspection timelines. We handle the permits and the gas line installation, so you don't have to chase down inspectors.

If there's no gas main, you're on propane, period. That means a propane tank somewhere on your property. Most suburban homes with propane heat use a 500-gallon tank, either above ground or buried. Above-ground tanks need clearance from windows, doors, and ignition sources. Buried tanks look cleaner but cost more to install. You also need driveway access for the propane delivery truck, even in winter. I've seen a customer in Avon whose above-ground tank was behind a fence next to the garage. When the snow drifted, the propane truck couldn't reach it. They had to shovel a path and the driver had to drag the hose 75 feet. Not fun.

One objection we hear: 'I heard propane is always more expensive.' That's true most of the time, but if natural gas prices spike, the gap can narrow. Over the last five years, natural gas has been the cheaper fuel in central Indiana, but you should compare current rates for your specific area.

Furnace Equipment: Efficiency, Venting, and Conversion Kits

Now, let's talk about the furnace itself. Many modern furnaces are configured for either fuel, but you can't just flip a switch.

Conversion Kits and Gas Piping

Converting from propane to natural gas (or vice versa) requires a licensed pro to change the burner orifices, adjust the regulator spring, and sometimes recalibrate the gas valve. If you're switching from propane to natural gas, you also need to make sure your gas piping is large enough. Older propane systems might have 1/2-inch pipe that's fine for LP, but natural gas needs more volume, so you might need to upsize to 3/4-inch or larger. That's one reason a conversion isn't always a simple job.

Venting and Condensate in Cold Weather

Efficiency matters too. A condensing furnace (high-efficiency, usually 90% AFUE or higher) vents with PVC pipes, not a metal chimney liner. That's because the exhaust is cool enough to condense water vapor. If your current furnace vents into an old masonry chimney, you'll need to run new PVC venting, usually out a side wall. That can be a sticking point for historic homes in Meridian-Kessler, Irvington, or Broad Ripple where you don't want PVC pipes on the front facade. We've done careful vent routing through side yards or even out the back. And don't forget the condensate drain—those little PVC pipes can freeze in our cold snaps. We wrote a whole post about furnace condensate drain freezing in winter. Trust me, a frozen condensate line will shut down a high-efficiency furnace faster than anything.

Speaking of comfort, if you're replacing the furnace anyway, consider a two-stage or variable-speed model. They run longer at lower output, which keeps temperatures more even and uses less fuel during mild weather. We've got more on that in our post two-stage vs variable-speed furnaces in Indiana. And if you want to cut gas use even further, a dual-fuel system pairs a heat pump with a gas furnace. The heat pump does the work when it's above freezing, and the furnace kicks in for the real cold. That setup often qualifies for extra rebates.

Safety is non-negotiable. Any gas furnace produces carbon monoxide if it's not burning right. We recommend CO detectors on every level, especially near bedrooms. We wrote about carbon monoxide detector placement for Indiana homes. A licensed HVAC pro should also do combustion testing after a conversion to make sure the burn is clean.

What It Costs to Switch and How to Decide

So what's the bottom line? If you already have natural gas available at the street, switching from propane to natural gas usually makes sense in the long run. You'll pay maybe $2,000 to $5,000 for the gas line and meter installation, depending on distance and yard obstacles. Then you'll need the furnace conversion kit and possibly some pipe upsizing. If your existing propane furnace is old and not worth converting, you might replace it with a new natural gas furnace—and many high-efficiency models qualify for Indiana utility rebates or federal tax credits.

If you don't have natural gas, propane is a solid fuel, but you need to plan for tank installation, delivery logistics, and price swings. Some homeowners in areas like rural Zionsville or Noblesville decide to go with a heat pump instead, or a dual-fuel system with a smaller propane tank as backup.

The only way to know your actual costs is to get a load calculation done. A Manual J load calculation (we do them for every job) makes sure you're not oversizing the furnace, which wastes fuel and shortens equipment life. We'll also check your current gas piping, venting path, and electrical situation. Then we give you a line-item proposal for both propane and natural gas configurations, including permits and any gas line or tank work.

No pressure, no guessing. If you're trying to decide between a propane vs natural gas furnace, let's talk. We'll come out, look at your home, and give you a straight answer. You can schedule a time at [/#quote] and we'll keep the jobsite tidy. Because in Indiana, your furnace has one job: keep you warm without drama.