If you’re in the market for a new water heater, you have plenty of options to choose from. One decision you might be facing early on, though, is whether you should choose a model that is fueled by gas or electricity.

Natural gas is certainly the preferred variety, at least for now. It powers about half the water heaters currently on the market. Most of the other half, though, is fueled by electricity. Just a small percentage of models currently use propane (LP), kerosene or oil. There are also some water heaters that run on solar panels or by burning wood.

When natural gas is an option, you should choose a water heater that is gas fueled. While electricity is clearly a popular choice, it should be seen as a second-best alternative. People in the know only choose electricity when natural gas simply isn’t an option or if their home can’t support a flue through the roof for whatever reason.

Gas is not only more affordable, but it’s also more efficient when it comes to heating your tank’s supply of water. For that matter, kerosene, oil and propane are better options as well. But none of them can be piped to a house, so they’d be far less convenient.

In 2012, the Department of Energy provided the following data about the average cost of energy sources for residential homes. These numbers were dollars per million BTUs:

  • Electricity: $32.55
  • Kerosene: $23.73
  • Propane: $23.07
  • Oil: $19.08
  • Gas: $10.54

Now, obviously, these rates are different by locale and vary as time goes by. But still, even with a large degree of variance, it’s easy to see that natural gas is the most efficient option available.

The type of fuel you select for your water heater will affect more than just your system’s output. It will also decide how much you spend every year. Efficiency affects both.

For example, if you select an electric heat pump for your heater, you’ll most likely enjoy greater efficiency over a more conventional option like a storage water heater. This means you’d be more likely to pay less each year in energy costs.

When you’re shopping around, check for the energy factor, or EF, on a system’s label. This tells you how efficient the unit is in converting its fuel into heat. The higher that number, the more efficient the water heater is. You’ll find that electric water heaters have numbers that range between 0.75 and 0.95. Gas units fall between .5 and .07. Keep in mind that electric units may run more efficiently, but they’re also usually more expensive to run than gas.

Should I Buy an Electric or Gas Water Heater?