The obvious should be stated - the absolute cheapest way to heat your house is geothermal. It should at least be considered. Next cheapest is air source heat pump particularly with an efficient mini split. It seems to me that converting the whole house to a standard ducted heat pump has a fairly low upfront cost and a fairly low run cost. It is a compromise for upfront cost and ongoing cost. I can't see why anyone would recommend propane - unless the goal is having generator backup heat. Are you talking paying $350 for 12 months? A heat pump with electric backup should be 50% of that or less depending on climate and what system you buy. It would seem like Carrier Greenspeed would pay off for such a high heating need. You would probably save closer to 75% compared to oil. So even though it might be $20k installed, the payback is 7 years. You really need to experience a well installed forced air system. I don't know mine is on. I fail to see how a gentle circulation of air through a filter creates dust - it actually reduces it. And then it humidifies it.

I'm suspecting you live in an area that gets quite cold and is not suitable for a heat pump (except geothermal $$$$$). Heating water resistively would cost a lot more than with oil....

Well the latest quote is in and it's the best so far. It's for two America Standard Freedom 95, two stage, variable speed furnaces. A 60k BTU system for the rental unit ( it gets a $600 rebate after installation) and a 100kBTU unit ($300 rebate) for the larger upstairs apartment. The quotes include everything; permits, thermostats, hard wired CO detectors, and removal of old oil tanks. 60k BTU cost $5500 100k BTU cost $5900 I will get $900 in rebates so the total cost for the install is $10500 I talked to the contractor as I believed that the units were oversized. The furnaces are purchased from the gas supplier and are the ones approved for rebates. He said a single stage 40k BTU unit will be fine for the rental apartment, but American Standard does not make a 40k BTU two stage unit and the 60k BTU unit will cost the same after the $600 rebate and it will be quieter, cheaper to run and will keep the tenants a bit more comfortable. I could get a 40k BTU Carrier Performance 96, there's a $300k rebate on that. He says an 80k BTU unit would be ok for the upstairs two floor apartment as far as heating goes, but from experience he feels that the larger fan capacity of the 100 kBTU unit is needed to get the air up from the basement to the top floor.

Re: mike_home “It is unusual to see a house built in the 1980s with oil fired baseboard baseboard heat…” I would tend to agree but won’t comment further until the OP posts more info, particularly about the type of baseboard emitters (cast iron?) and water temperature required. IMPO SR