Furnace oil in New Brunswick has been sitting around $1.40 to $1.50 a litre, and it seems like every second house in Greater Moncton has sprouted a heat pump on the wall. So which one actually keeps your home warm for less money?
If you’re weighing oil heat vs heat pump cost, you’re asking the right question at the right time. We talk to homeowners across Moncton, Dieppe, and Riverview every week who are staring at an aging oil tank and wondering whether to replace it or walk away from oil entirely. The honest answer is that heat pumps usually cost less to run, oil costs far less up front, and most homes around here end up running both. Let’s walk through the real numbers so you can decide with your eyes open.
The Short Answer on Oil Heat vs Heat Pump Cost
Here’s the quick version before we dig into the details.
A typical Greater Moncton home heated with oil burns somewhere between 1,800 and 2,800 litres a year. At $1.45 a litre, the middle of that range works out to roughly $3,300 in fuel. Add an annual furnace tune-up at $150 to $250 and you’re paying around $3,500 a year to heat with oil.
That same home heated mostly by cold-climate heat pumps might add $1,300 to $1,800 a year to its power bill. That’s roughly half the running cost of oil, sometimes better.
But running cost is only half the story. A fully ducted cold-climate heat pump system can cost $16,000 to $25,000 installed. A new oil tank, by comparison, usually lands between $3,000 and $5,500. And on the coldest nights of a New Brunswick February, plenty of heat pump owners are very glad they kept their oil furnace as backup.
If this decision got dropped in your lap by an insurance letter about an old tank, don’t panic and don’t rush into a $20,000 conversion just to make the letter go away. Call us at (506) 806-0900 or request a free written estimate on the tank side of the equation first. Once you know what a new tank actually costs, the rest of the math gets a lot easier.
What Oil Heat Costs to Run in Greater Moncton
Oil heat has three cost buckets: fuel, maintenance, and the equipment itself.
Fuel is the big one. Furnace oil prices in NB move with world markets, and they move fast. Over the past several years we’ve seen prices swing from under $1.10 a litre to over $1.90. At 2,300 litres a year, that swing alone is the difference between about $2,500 and $4,400 for the exact same house. That unpredictability is a real cost, even if it never shows up as a single line on a bill.
Maintenance is steady and modest. A yearly tune-up runs $150 to $250 and keeps your furnace burning at its rated efficiency, usually 82 to 87 percent for units installed in the last two decades. Skip the tune-up and a sooted-up burner can quietly eat an extra 10 percent of your fuel.
Equipment is where oil shines. If your furnace is in decent shape, keeping oil heat alive usually means replacing the tank once every 15 to 25 years. A new Granby steel or Roth double-wall tank, installed and inspected, typically runs $3,000 to $5,500 in our area. Our oil tank replacement service in Moncton handles the whole swap in a day, including disposal of the old tank. If you’re wondering how much life your current tank has left, our guide on how long oil tanks last breaks down the warning signs.
Add it up and a realistic yearly cost for oil heat in Greater Moncton is $3,000 to $3,800, with the tank replacement averaging out to another $190 or so per year over its life.
What a Heat Pump Costs to Run on NB Power Rates
A heat pump doesn’t make heat, it moves it. Even at minus 15, there’s heat energy in outdoor air, and a cold-climate unit squeezes it inside. For every kilowatt-hour of electricity it uses, it typically delivers two to three kilowatt-hours of heat over a New Brunswick winter.
Natural Resources Canada’s guide to heating and cooling with a heat pump is worth a read if you want the engineering details. The short version for our climate: expect a seasonal average of roughly 2 to 2.5 units of heat per unit of electricity, not the 3 or 4 you’ll see quoted for milder provinces.
Now the dollars. A typical Moncton-area home needs somewhere around 18,000 to 20,000 kilowatt-hours of heat per year. Delivered by a cold-climate heat pump at a seasonal average of 2.3, that’s roughly 8,000 to 8,700 kilowatt-hours of electricity. At NB Power’s residential rate of about 15 cents per kilowatt-hour, you’re looking at $1,200 to $1,300 a year.
Real life adds a bit on top. Output drops on the coldest days, so backup heat kicks in, whether that’s electric baseboards at full price per unit of heat or your oil furnace. Budget $1,300 to $1,800 a year in total heating electricity for a well-installed system, plus $100 to $200 for an annual cleaning.
Tanya in Riverview is a good example of how this plays out. She had two mini-split heads installed for about $9,800 and kept her oil furnace for backup. Her oil use dropped from roughly 2,400 litres a year to about 900, saving her around $2,100 in fuel at $1.45 a litre, while her power bill went up about $1,000. Net savings: about $1,100 a year, and a cooler house in July as a bonus.
Side by Side: Annual Cost of Oil Heat vs a Heat Pump
Here’s how the two options compare for a typical Greater Moncton home.
| Cost item | Oil heat | Cold-climate heat pump |
|---|---|---|
| Typical annual running cost | $3,000 to $3,800 | $1,300 to $1,800 |
| Annual maintenance | $150 to $250 tune-up | $100 to $200 cleaning |
| Typical install cost | $3,000 to $5,500 for a new tank | $4,000 to $5,500 per mini-split head; $16,000 to $25,000 ducted |
| Performance at minus 25 | Full output, no drop | Output drops, backup heat needed |
| Price stability | Swings with world oil markets | Regulated NB Power rates |
| Equipment lifespan | Tank 15 to 25 years, furnace 20 to 25 years | 12 to 15 years |
| Summer cooling | None | Included |
Two things jump out of that table. First, the heat pump wins on running cost by a wide margin, roughly $1,500 to $2,000 a year for most homes. Second, oil wins on upfront cost and on those brutal cold snaps when the wind is howling off the Petitcodiac and the mercury won’t climb past minus 25.
That’s why the question is rarely oil or heat pump. For most Greater Moncton homes, it’s how much of each.
Install Costs and Rebates: The Other Half of the Math
The running-cost gap looks great until you price the conversion.
A single ductless head covering an open-concept main floor runs $4,000 to $5,500 installed. Two or three heads to cover most of a house lands between $8,000 and $14,000. A fully ducted cold-climate system that replaces your furnace outright is usually $16,000 to $25,000, sometimes more if your electrical panel needs an upgrade.
Rebates soften that. NB Power and federal programs have offered anywhere from $1,000 to $10,000 or more depending on income and home type, and the programs change often. We keep a current rundown in our post on oil to heat pump grants in NB, and our guide to oil to heat pump conversion in Moncton walks through the whole process from first quote to final inspection.
Here’s the mistake we see most often: spending big on a conversion under pressure. Gilles in Memramcook got an insurance letter last fall about his 28-year-old tank and nearly signed a $18,500 contract for a full ducted conversion the same week, in October, with winter coming. He called us first. We replaced his tank for $2,900, his insurer was satisfied, and he added a single mini-split the following spring at his own pace, with rebate paperwork done properly instead of rushed.
The lesson isn’t that conversions are bad. It’s that a tank replacement buys you time to convert on your schedule, not your insurance company’s.
If a letter like that is sitting on your kitchen table right now, get a free written estimate from us before you make any big decisions. It costs nothing and it turns a panic into a plan.
Why Most Greater Moncton Homes End Up With Both
Walk any street in Dieppe or Shediac and you’ll see the pattern: a heat pump head on the wall and an oil fill pipe on the foundation. That’s not indecision. That’s the setup that fits our climate.
A hybrid home runs the heat pump for most of the season, when it’s cheap and efficient. When temperatures dive below about minus 20 and the heat pump’s output sags, the oil furnace takes over and delivers full heat no matter what the thermometer says. You burn maybe a third of the oil you used to, and you never lie awake during an ice storm wondering if the house will hold temperature.
The Boudreau family in Shediac learned this the reassuring way. During a February cold snap two winters back, their two-head mini-split system couldn’t hold the house above 17 degrees on its own at minus 26 with the wind chill. Their oil furnace carried the load for four days. The oil they burned that month cost them about $260, which felt like cheap insurance for a warm house full of kids. When their tank hit year 22 last summer, replacing it for $3,100 was an easy call.
There’s a power-outage angle too. Heat pumps and electric backup both die with the grid. An oil furnace still needs electricity for its burner and blower, but it can run on a small generator that would never keep up with electric heat.
One caution if you go hybrid: an oil tank that only gets topped up once a year needs a little more attention, not less. Condensation builds in a tank that sits half empty through the summer, and water in the tank leads to corrosion from the inside out. Keep it full in the off-season, get it looked at during your furnace tune-up, and never ignore a wet spot or an oil smell. If you ever do find oil where it shouldn’t be, stop guessing and call a professional right away. A leak is not a DIY problem, and our 24/7 emergency line at (506) 806-0900 exists for exactly that moment.
And if you do eventually go all-electric, that old tank shouldn’t just sit there. An out-of-service tank can still leak, and insurers don’t like them. Our oil tank removal service in Moncton takes care of pump-out, disconnection, and disposal with the paperwork to prove it.
Frequently Asked Questions
Is it cheaper to heat with oil or a heat pump in New Brunswick?
A cold-climate heat pump is cheaper to run for most NB homes, typically $1,300 to $1,800 a year in electricity versus $3,000 to $3,800 for oil. Oil is much cheaper up front, since a new tank costs $3,000 to $5,500 while a full heat pump conversion can top $20,000. Over ten years, a well-sized heat pump usually comes out ahead, especially with rebates. The gap shrinks for smaller homes or homes that need lots of backup heat.
Should I replace my oil tank if I’m planning to switch to a heat pump?
If the switch is happening this year and your tank is sound, you can often wait. But if your tank is past 15 to 20 years old, showing rust, or flagged by your insurer, replace it rather than gambling on a leak. A leak can cost tens of thousands in cleanup and would wipe out a decade of heat pump savings overnight. A new tank also keeps the hybrid option open, which is what most Greater Moncton homes choose anyway.
Can a heat pump handle a New Brunswick winter on its own?
A properly sized cold-climate heat pump can carry a well-insulated home through most of the winter. Below about minus 20 to minus 25, output drops and some form of backup heat has to fill the gap. That backup can be electric resistance, which is pricey to run, or an existing oil furnace. Homes with older insulation or open layouts on the coast, like Shediac, tend to lean on backup more often.
What does it cost to fully switch from oil to a heat pump?
Plan for $16,000 to $25,000 for a ducted cold-climate system, or $8,000 to $14,000 for multiple ductless heads, before rebates. Then add proper decommissioning of the oil system, including tank removal, which typically runs several hundred to a couple thousand dollars depending on access. Rebate programs in NB can knock thousands off the total, and they change often, so check what’s current before you sign anything. Get the tank side priced with a free written estimate so the whole budget is real numbers, not guesses.