Oil Furnaces in Canada in 2024 [Are they outdated?]

Oil heating isn’t as common as it once was, mainly because natural gas is cheaper for many people. However, in Canada’s Northern Territories and in the Atlantic Canada maritime provinces, many homes still rely on oil furnaces to stay warm because natural gas isn’t an option everywhere.

This guide will cover everything you need to know about oil furnaces, including their advantages and disadvantages, how much they cost, what goes into installing one, and more.

What Is an Oil Furnace and How Does It Work?

An oil furnace is a device used to heat a home by burning heating oil using electricity to produce warmth. Although it’s been a traditional heating option for decades, most countries, including Canada, are phasing it out.

When your home gets too cold, a thermostat notices and signals the furnace to warm things up. The furnace then pumps oil from a tank to a burner, turning it into warm air or hot water, depending on your system (central forced-air system or hydronic heating system).

For homes with air systems, also known as central forced-air systems, a network of ducts spreads the heated air around your house.

If your home uses a water system, also known as hydronic heating, the oil furnace heats water that’s then moved to either baseboards or radiators to give off heat.

Sizing and Heating Capacity

The size of the furnace you need depends on several factors, including the size of your home, its insulation quality, the climate you live in, and your personal heating preferences.

Here’s a simplified chart to show the relationship between home size and the required furnace capacity, measured in BTUs (British Thermal Units).

Home Size (Square Feet)	Furnace Capacity (BTUs per hour)
Up to 1,500	45,000 - 60,000
1,500 - 2,500	60,000 - 90,000
2,500 - 3,500	90,000 - 120,000
3,500 - 4,500	120,000 - 150,000
Over 4,500	150,000+

Oil Furnace Efficiency Ratings

Efficiency ratings for oil furnaces are measured by their Annual Fuel Utilization Efficiency (AFUE) percentage, which tells you how much fuel becomes heat for your home. Most new oil furnaces have between 84% and 90% AFUE ratings and don’t burn as efficiently as gas ones, ranging from the legal minimum to more efficient models up to 98% AFUE.

However, if you have an older furnace that hasn’t been well-maintained, its efficiency could drop to the 60s or even lower.

If you use 2,500 liters of heating oil over winter, at CAD 1.69 per liter, your total cost for heating oil would be CAD 4,225.

With an 85% efficiency rating, your effective heat usage is 2,125 liters (85% of 2,500 liters), and the cost for the heat actually used is approximately CAD 3,591.25. The rest, CAD 633.75, essentially pays for the system’s inefficiency.

Tip: Combine a heat pump with an oil furnace backup for an efficient heating solution. It provides adequate cooling and heating for most of the year, with the oil furnace kicking in for extra warmth during colder temperatures.

To know more, you can read our detailed guide on hybrid heating.

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Oil Furnace Environmental Impact

While generally not emitting carbon monoxide into homes, oil furnaces contribute significantly to environmental pollution.

According to the Quebec government, oil heating systems produce around a million tonnes of CO2 annually, equivalent to the emissions from 300,000 cars. Besides CO2, these systems also emit nitrogen oxide, sulfur dioxide, and fine particles, which can harm health and the environment.

In response, Canadian provinces are taking action:

Quebec has banned oil-powered heating in new construction projects as of December 31.
Nova Scotia plans to ban oil-fired heating equipment in new buildings by 2025.

Other Canadian provinces still permit using oil furnaces but with specific conditions focusing on efficiency and emissions to minimize environmental impact.

Furthermore, due to the carbon tax, heating oil costs are likely to increase, making other heating sources like heat pumps more cost-effective, in addition to being better for the environment.

How Much Does an Oil Furnace Cost?

An oil furnace typically costs between $5,000 and $7,000, with some high-efficiency models reaching up to $10,000. For those considering a replacement, the average cost is similar to other furnace types and ranges from $3,500 to $6,000.

Here’s a table showcasing some of the best brands for oil furnaces and their costs:

Brand	Unit Cost ($)	Total Cost with Replacement ($)
Armstrong	$2,400 – $7,300	$3,400 – $10,300
Carrier	$2,800 – $6,000	$3,800 – $9,000
Lennox	$3,200 – $6,500	$4,200 – $9,500
Rheem	$3,000 – $7,000	$4,000 – $10,000
Trane	$2,800 – $6,400	$3,800 – $9,400

Additional Furnace Installation Costs

Item	Cost Range
Old furnace removal	$150 – $400
Permits and inspections	$40 – $300
Ductwork	$15 – $40 per linear foot
HEPA filter	$450 – $2,500
Asbestos inspection/testing	$250 – $700
Humidifier	$700 – $1,050
Thermostat	$50 – $300
Variable-speed blower	$5,000
Insulation	$3,000 – $7,000

Pros and Cons of Oil Furnaces

Oil furnaces are a traditional choice for many, offering specific advantages and disadvantages compared to natural gas or electric systems.

Pros

Cost-Effective Replacement in Certain Cases: Replacing an old oil furnace may be more cost-effective initially than converting to gas or propane, but is likely to be more expensive in the long run.
Control: Homeowners have complete control over their oil supply without reliance on utility companies.
Heating Output: Some oil furnaces have higher BTU output.
Independence: These systems don’t require pipeline infrastructure, offering flexibility in remote locations.

Cons

Storage: Oil heating requires a storage tank, adding complexity and space requirements.
Higher Operating Costs: Day-to-day running costs are higher than those for gas furnaces.
Maintenance: Oil systems need frequent maintenance and cleaning due to soot and dirt.
Price Volatility: Oil prices can fluctuate widely, similar to gasoline, affecting heating costs.
Supply Management: Homeowners must monitor and replenish their oil supply.
System Separation: Unlike integrated HVAC systems, oil heating and air conditioning systems are separate, potentially requiring services from different providers.
Limited Service Providers: Fewer technicians specialize in oil furnace maintenance due to its decreasing popularity.
Higher Home Insurance Costs: Many insurance companies may charge substantially higher premiums due to the perceived risk of having a large oil tank in your home.

Installation and Maintenance Tips

Here are some essential tips to keep your oil-powered heating system in top condition:

Change Your Air Filter Regularly: Aim to replace the air filter at least twice yearly to maintain air quality and furnace efficiency.
Inspect the Furnace Area: Before each heating season, check around your furnace. Ensure nothing is hitting it, and keep the area clear within a two-foot radius. Look for any buildup on the floor around your furnace. If you spot anything, avoid touching it and call an HVAC professional.
Annual System Inspection: Have a professional inspect your system before the onset of cold weather to ensure it’s in good working condition.
Keep Flammables Away: Keep clothing, boxes, newspapers, and other flammable materials away from the furnace. These items can easily catch fire and may also void any service agreements.
Monitor Your Fuel Level: Regularly check your heating oil levels to avoid running out in the middle of winter. Ensuring you have enough fuel is critical, especially during peak cold periods. In an emergency, you can use kerosene or diesel to run your furnace (not recommended for long-term usage).
Cleaning Your Furnace: For cleaning, first, turn off your furnace and let it cool down to avoid any burns. Then, use a vacuum with a hose attachment to remove dust and debris around the unit.
Don’t Turn Off Furnace in Summer: Turning off your oil furnace in the summer is not recommended. Keeping it on prevents the system from seizing and remains ready for use when temperatures drop.

Oil Furnace Considerations

Here are key considerations tailored to homeowners looking to understand and possibly choose an oil furnace for their heating needs:

Assess Your Space: Consider the size and insulation quality of your home. A larger, less insulated space will require a furnace with a higher BTU output for efficient heating.
Operating Costs: Be aware that oil prices can be volatile, potentially leading to higher operating costs over time. Compare these costs with those of alternative heating options.
Service Availability: Given the fewer service providers for oil furnaces, check the availability of qualified technicians in your area.
Fuel Storage: Consider the logistics of oil storage, including tank size, location, and the need for regular refills. If propane is more readily available or cost-effective in your area, consider installing a gas conversion burner to easily switch your system from oil to propane or natural gas.
Longevity and Upgrades: Think about the longevity of the system and the potential for future upgrades. As energy prices and technologies evolve, ensure your furnace can be efficiently operated or replaced.
Regulations: Stay informed about local and national regulations regarding your area’s oil furnace installations, emissions, and potential bans or restrictions.

For more information: Complete Furnace Buying Guide

Oil Furnaces vs Other Furnaces

Let’s talk about how different types of furnaces stack up against oil furnaces and what factors you should consider when choosing.

Electric Furnace vs Oil Furnace

Efficiency and Operating Costs: Electric furnaces are known for their high efficiency, often operating at 100% since all the electricity directly produces heat. However, that doesn’t mean they are cheaper. In fact, they are way more expensive to run than an oil furnace.
Installation and Maintenance: Electric furnaces are generally cheaper and easier to install than oil furnaces, as they don’t require a fuel storage tank or a chimney for exhaust. Maintenance for electric furnaces is also typically more straightforward and less costly, with no need for fuel delivery or cleaning of combustion by-products.
Environmental Impact: Electric furnaces produce no on-site emissions, making them a cleaner option environmentally.
Durability and Lifespan: An electric furnace might offer a longer, less troubled service life due to its simplicity. However, an oil furnace can also be durable with diligent maintenance.