The short answer
LPG vs natural gas: which is cheaper for your home
Compare LPG and natural gas on the price tag and you will pick the wrong one, because the two fuels are not billed the same way and do not even carry the same energy per unit. Reticulated natural gas (the gas piped to your home through the mains) has a lower usage rate in cents per megajoule, but it adds a fixed daily supply charge you pay every day of the year. LPG (liquefied petroleum gas), the bottled propane in cylinders, has a much higher rate per megajoule, but it skips the mains supply charge and instead adds cylinder rental or delivery. So the cheaper fuel is not a fixed answer: it depends on your total annual cost at your usage, and it can flip between a light user and a heavy one. This page explains how each fuel is really priced, where the two genuinely differ, and how to work out which one wins for your home.
Here is the core takeaway in one line: natural gas has a lower usage rate in cents per megajoule but adds a fixed daily supply charge, while LPG has a higher rate per megajoule but no mains supply charge, so the cheaper fuel is whichever wins on total annual cost at your usage. That single mechanic explains why there is no universal answer. A heavy user, such as a home that heats with gas, almost always does better on mains natural gas, because the lower rate is applied to a lot of megajoules and easily covers the supply charge. A light user who only cooks with gas can do better on LPG, because there are few megajoules to charge and no daily supply charge to carry. Work out both totals at your own usage and the winner becomes obvious.
Reframe the assumption: "is LPG cheaper than natural gas?" is the wrong question, because it assumes one fixed answer. The two fuels carry different energy per unit and add different standing costs, so the comparison is total dollars a year at your usage, not the headline rate. Read it as usage charge plus standing cost on each fuel, then compare the totals.
The blind spot
Why most LPG vs natural gas guides get it wrong
Most articles comparing LPG and natural gas do one of three unhelpful things, and each one steers readers towards the wrong fuel.
First, they compare the per-unit rate and stop there. They note that natural gas is cheaper per megajoule and declare it the winner, never adding the daily supply charge on one side or the cylinder rental on the other. Standing costs are exactly what decides a light-usage home, so leaving them out gives the wrong answer for the readers most likely to be on LPG.
Second, they treat a litre and a cubic metre as the same amount of gas. Natural gas carries about 38.5 MJ per cubic metre, while LPG carries about 25.3 MJ per litre, so the two are billed in different units that hold different energy. Compare the raw prices without converting both to megajoules and the numbers are meaningless.
Third, they ignore the switching cost. They suggest you can simply move from one fuel to the other, never mentioning that a gas appliance set up for LPG needs a conversion kit, with different injectors and operating pressure, to run on natural gas. That conversion is a real cost, and a guide that skips it makes switching fuels sound free when it is not.
How the two fuels really differ
Expert analysis: the machinery behind LPG and natural gas
They carry different energy per unit
Start with the physics, because it underlies everything else. Both fuels are billed by the energy they deliver, measured in megajoules (MJ), the unit of heat energy gas is billed in, but they pack that energy differently. Reticulated natural gas holds about 38.5 MJ per cubic metre (m3), the unit your mains meter reads. LPG (propane) holds about 25.3 MJ per litre as a liquid, or about 49 MJ per kilogram, which is how cylinders are sized. A full 45 kg cylinder holds roughly 2,200 MJ, and a 9 kg barbecue bottle about 440 MJ. Think of it like comparing two firewood species sold in different bundles: you cannot judge value until you convert both to the heat they give off. For gas, that common unit is the megajoule.
Pricing structure: lower rate plus supply, versus higher rate plus rental
This is where the real difference lives. Reticulated natural gas has a lower usage rate, about 3 to 5 c/MJ, but it adds a fixed daily supply charge of roughly 70 c to $1 a day, around $300 a year, that you pay whether you burn gas or not. LPG has a markedly higher usage rate, roughly 6 to 12 c/MJ, reflecting refining, bottling and truck delivery, but it carries no mains supply charge; instead you pay cylinder rental of about $80 to $100 a year per 45 kg cylinder, plus delivery. So natural gas front-loads a fixed cost and discounts the energy, while LPG skips the fixed cost and charges more for the energy.
Availability: natural gas only where the mains reach
Natural gas can only reach a home where the mains reticulation network has been built, which is mostly the established suburbs of the eastern states (Victoria, New South Wales, South Australia, Queensland and the ACT). Many regional towns were never connected, and most of Western Australia relies on LPG for domestic gas. For a large share of Australian homes, LPG is not a choice against natural gas at all; it is simply the gas option available. Where mains gas does reach the street, you usually have both fuels to weigh up.
Neither fuel is under the DMO or VDO
It is worth saying plainly. Electricity has reference prices: the Australian Energy Regulator sets the Default Market Offer (DMO) in New South Wales, south-east Queensland and South Australia, and Victoria runs its own Victorian Default Offer (VDO). Gas has neither, and LPG is essentially unregulated. There is no capped reference price for either fuel, so offers vary widely on both the usage rate and the standing cost, and the spread between a sharp deal and a lazy one is wide. That is exactly why comparing on total cost, rather than trusting a headline rate, matters more for gas than it does for electricity.
Interactive explainer
LPG vs natural gas cost comparator
Set your annual gas energy use and the rates, then see the total annual cost on each fuel side by side, the cheaper option, and the usage level where they break even.
Your annual gas energy use: MJ
Natural gas
$
per year
LPG
$
per year
The cheaper fuel at this usage
Below the break-even usage LPG is cheaper (no daily supply charge to carry); above it natural gas is cheaper (its lower rate wins on volume). In plain words: a light user often does better on LPG, a heavy user on mains natural gas.
Assumptions: defaults use a natural gas usage rate of 4 c/MJ with an 80 c/day supply charge, and an LPG usage rate of 9 c/MJ with $90 a year cylinder rental, all indicative and varying by state, retailer and delivery distance. Estimate only, before GST and any discounts. Sources: Canstar Blue 2026, AER, AEMC.
| Component | Typical value | What it means |
|---|---|---|
| Natural gas usage rate | ~3 to 5 c/MJ | Charged on each megajoule of mains gas delivered. Lower per unit than LPG, but it comes with a daily supply charge. Varies by state and retailer. |
| Natural gas supply charge | ~70 c to $1/day | A fixed daily charge for staying connected to the gas network, billed every day of the year regardless of usage (roughly $300 a year). |
| LPG usage rate | ~6 to 12 c/MJ | Charged on each megajoule of bottled propane. Markedly higher per unit than mains gas, reflecting refining, bottling and delivery [verify]. |
| LPG cylinder rental | ~$80 to $100/year | An annual rental per 45 kg cylinder. LPG has no mains supply charge, so this rental plus delivery is the LPG equivalent of a standing cost [verify]. |
| Fuel or unit | Energy content | What it means |
|---|---|---|
| Natural gas | ~38.5 MJ/m3 | Energy per cubic metre, the unit your mains meter reads. |
| LPG (propane), liquid | ~25.3 MJ/L | Energy per litre of liquid LPG, the way tanks and deliveries are measured. |
| LPG (propane), by weight | ~49 MJ/kg | Energy per kilogram, the way cylinders are sized. |
| 45 kg cylinder | ~2,200 MJ | Roughly the energy in one full domestic LPG cylinder. |
| 9 kg BBQ bottle | ~440 MJ | Roughly the energy in a portable barbecue bottle. |
What this looks like in real homes
How the LPG versus natural gas choice plays out
The mechanics above are not theory. They are exactly how Australian households end up on the right or the wrong fuel:
The gas-heated home that should be on mains gas
A Melbourne household heats with a gas ducted system and burns a lot of megajoules over winter. On mains natural gas the lower 4 c/MJ rate easily covers the daily supply charge, while the same energy on LPG at 9 c/MJ would cost hundreds more a year. For a heavy user, the lower rate wins comfortably.
The cooking-only flat where LPG can win
A small unit uses gas only for the cooktop, perhaps 5,000 MJ a year. On mains gas the daily supply charge of roughly $300 a year dwarfs the tiny usage cost, so a couple of LPG bottles a year, with no supply charge, can work out cheaper despite the higher rate. Few megajoules means the standing cost decides it.
The regional home with no choice
A property outside the reticulation network has no mains gas at the street, so LPG is simply the gas option. The comparison is not LPG against natural gas at all; it is LPG against electricity for cooking, hot water and heating, which is a different decision.
The mover who forgets the conversion cost
A family moves from an LPG home into a natural gas suburb and assumes their gas heater and cooktop will just work. They will not until a licensed gasfitter fits a conversion kit, swapping the injectors and adjusting the pressure, a hidden cost that should sit in any switch-fuel sum.
The insider insight
The real comparison is total annual cost, and it flips by usage
Here is the part most LPG versus natural gas guides never join up. Because natural gas pairs a low rate with a fixed daily supply charge, and LPG pairs a high rate with no supply charge, the two cost lines cross at a particular usage level. Below that point the LPG line sits lower, because there is no daily charge eating into a small bill. Above it the natural gas line sits lower, because its cheaper rate is multiplied across a lot of megajoules. So the question is never "which fuel is cheaper?" in the abstract; it is "where does my usage sit relative to the break-even point?"
The non-obvious truth: the cheaper fuel flips with how much gas you use. A light user (cooking and the odd hot shower) often wins on LPG because there is no daily supply charge to carry, while a heavy user (gas central heating) almost always wins on mains natural gas because the lower c/MJ rate is applied to far more megajoules. There is also a hidden switching cost most people miss: LPG and natural gas appliances are not interchangeable, because they run at different pressures and need different injectors, so moving an appliance between the two fuels means paying a licensed gasfitter for a conversion kit. Factor that into any decision to change fuels.
The practical consequence: do not pick a fuel on its headline rate. Add the usage charge and the standing cost across a full year on each side, at your real usage, and only then choose, remembering that an appliance conversion is part of the cost of switching fuels.
Grounded in the analysis
What you should actually do
Specific moves that follow from how each fuel is priced, not generic advice.
Convert everything to megajoules first
Put both fuels in the same unit before you compare. Natural gas is about 38.5 MJ per cubic metre, LPG about 25.3 MJ per litre or 49 MJ per kilogram. Working in megajoules is the only way to compare a mains rate with an LPG rate fairly.
Add the standing cost on each side
Take your annual megajoules and apply each fuel's rate, then add the natural gas daily supply charge on one side and the LPG cylinder rental on the other. Compare the two yearly totals, not the per-unit rates, because the standing cost decides a light-usage home.
Check availability and switching cost
Confirm whether mains natural gas actually reaches your street; if it does not, LPG is your gas option. If you are switching fuels, budget for a licensed gasfitter to fit a conversion kit, since LPG and natural gas appliances are not interchangeable.
Once you know which fuel suits you, see how the charges add up on your gas bill, then read our guide to how to find the cheapest gas to lock in a sharp plan. If you are on mains gas, estimate your use with the gas usage calculator and benchmark it against the average gas bill in Australia.
Current figures, last updated 2026-06-15
Indicative Australian LPG and natural gas figures for 2026. Sources: Canstar Blue 2026, the Australian Energy Regulator (AER) and the Australian Energy Market Commission (AEMC). Gas charges vary by state, network, retailer and delivery distance, so confirm your own rates on a current bill or quote before relying on a figure.
The bottom line
Why comparing the right way pays off
LPG versus natural gas only looks like a single question until you see the two parts. Each fuel pairs a usage rate with a standing cost: natural gas a low rate plus a daily supply charge, LPG a high rate plus cylinder rental. Because of that, the cheaper fuel is not fixed; it flips at a break-even usage, with light users often ahead on LPG and heavy users almost always ahead on mains natural gas. Convert both fuels to megajoules, add the standing cost on each side, check whether mains gas even reaches your street, and remember that switching fuels means paying for an appliance conversion. Compare on total annual cost at your real usage, not on the headline rate, and you will land on the right fuel into 2026.
Common questions
A Selectra expert answers your LPG vs natural gas questions
Usually no, but not always. Per megajoule (MJ), the unit of heat energy gas is billed in, LPG is markedly more expensive than reticulated natural gas: roughly 6 to 12 c/MJ for LPG against about 3 to 5 c/MJ for mains gas. So a heavy user, such as a home that heats with gas, almost always pays less on natural gas. The twist is the standing costs. Natural gas adds a fixed daily supply charge of about 70 c to $1 a day (roughly $300 a year) that you pay even in summer, while LPG has no mains supply charge, only cylinder rental of about $80 to $100 a year. For a light user who only cooks with gas, avoiding that daily supply charge can make LPG competitive or even cheaper. The honest answer is that the cheaper fuel depends on your total annual cost at your usage, not on the headline rate alone.
Natural gas is mostly methane, piped to your home through the mains network (reticulated), and billed in cents per megajoule plus a fixed daily supply charge. LPG (liquefied petroleum gas) is propane, stored as a liquid in cylinders or a tank and delivered by truck, billed at a higher rate per megajoule with cylinder rental or delivery instead of a mains supply charge. They also carry different energy per unit: natural gas is about 38.5 MJ per cubic metre, while LPG is about 25.3 MJ per litre or 49 MJ per kilogram, so a litre of LPG and a cubic metre of natural gas are not the same amount of energy. The practical difference is availability: natural gas only reaches homes where the mains network has been built, so many regional homes and most of Western Australia rely on LPG.
Not without converting them first. LPG and natural gas burn at different pressures and need different sized injectors (the small jets that meter the gas to the burner), so an appliance set up for one fuel will not run safely or efficiently on the other as it stands. Most modern gas heaters, cooktops and hot water units can be converted with a conversion kit fitted by a licensed gasfitter, which swaps the injectors and adjusts the pressure. That conversion is a real, often overlooked cost when you switch fuels, for example moving into a natural gas suburb from an LPG home. Never attempt the swap yourself; it is a licensed job for safety reasons.
It depends mostly on whether mains natural gas reaches your street and on how much gas you use. If reticulated natural gas is available and you use a fair amount, particularly if you heat with gas, mains gas is almost always cheaper and more convenient, because the lower c/MJ rate outweighs the daily supply charge. If natural gas is not available, which is the case for many regional homes and most of Western Australia, LPG is your gas option by default. For a light user who only cooks with gas, LPG can be competitive even where mains gas exists, because there is no daily supply charge to carry. Work out your total annual cost on each fuel at your real usage rather than choosing on the per-unit rate.
LPG costs more per megajoule because of how it reaches you. Natural gas travels through a fixed mains network straight to the meter, so the cost of delivering each megajoule is low and is recovered partly through the daily supply charge. LPG (propane) has to be refined, compressed into a liquid, bottled into cylinders or pumped into a tank, then trucked to your property, and those handling and transport costs are built into the higher rate per megajoule. In exchange, LPG carries no mains supply charge and reaches homes the gas network never will. So the higher LPG rate is really paying for portability and delivery, which is exactly why it can still suit a low-usage home that would otherwise pay a year-round mains supply charge.
