Furnace System GuideAn oil furnace burns heating oil delivered to a storage tank on the property, then heats and circulates air like a gas furnace does. Oil heating is concentrated in colder regions and is measured by the same AFUE efficiency standard as gas. This page covers oil furnace efficiency, the role of the tank, and why maintenance matters.
Oil Furnace Efficiency and AFUE
Oil furnaces are rated on the same Annual Fuel Utilization Efficiency scale as gas furnaces. The Department of Energy describes AFUE as a measure of how efficiently the appliance converts the energy in its fuel to heat over a typical year, and federal rules cover oil-fired furnaces with heating capacities under 225,000 Btu per hour alongside gas and propane units.
For certification, ENERGY STAR requires oil furnaces to have a rating of 87 percent AFUE or greater. That is a lower threshold than the gas requirement, which reflects the different combustion characteristics of heating oil.
ENERGY STAR frames the efficiency gain in relative terms. It states that certified oil furnaces are up to 4 percent more energy efficient than baseline models, with savings of about $90 in energy costs per year, and that certified furnaces have higher AFUE ratings and higher-efficiency blower motors.
The Storage Tank
Unlike gas, which arrives through a utility pipe, heating oil is delivered by truck and stored in a tank on the property. That tank, whether in a basement, a utility room, or underground, is a defining part of an oil heating system and something the homeowner has to manage and refill through the winter.
The tank is why oil heat is tied to petroleum as a delivered fuel. The U.S. Energy Information Administration reports that petroleum was the next most-consumed residential energy source after natural gas and electricity in 2020, accounting for about 8 percent of total residential end-use energy, a category that includes heating oil.
Oil heating is also regional. The EIA notes that households in the Northeast and Midwest consume more energy on average than those in the South and West because of higher space-heating demand, and the Northeast in particular is where oil heat remains most common.
Maintenance and Delivered Efficiency
Oil combustion produces more residue than gas, so oil furnaces need regular servicing to keep the burner, nozzle, and heat exchanger clean and to hold their rated efficiency. A neglected oil burner drifts below its AFUE rating as soot builds up.
Efficiency ratings also assume the heat actually reaches the rooms. The Department of Energy notes that AFUE does not include duct or piping heat losses, which can be as much as 35 percent of the furnace's energy output when ducts run through unconditioned space, so distribution matters as much for oil as for gas.
For buyers replacing an oil furnace, the federal reference point for a less-efficient unit is 80 percent AFUE, and ENERGY STAR certified oil models start at 87 percent AFUE. Choosing a higher-AFUE unit and keeping it maintained is how an oil system delivers the fuel savings the rating promises.