Actually, it is not. It is significantly cheaper per gallon, but fuel oil has ~60% more BTU’s per gallon. Assuming similar efficiencies in the burners:
$2.868 Propane at 71,000 BTU/gallon is 4.0¢ per thousand BTU.
$4.104 Fuel Oil at 115,000 BTU/gallon is 3.6¢ per thousand BTU.
Just like ethanol to gasoline, not all fuels are created equal. Propane is relatively expensive fuel, especially compared to natural gas.
Fuel Oil Price http://www.eia.gov/dnav/pet/pet_pri_wfr_a_EPD2F_PRS_dpgal_m.htm
Propane Price
http://www.eia.gov/dnav/pet/pet_pri_wfr_a_EPLLPA_PRS_dpgal_m.htm
At the same time period (March 2012), Residential Natural Gas averaged $10.36 per 1,000 cu ft which equates to 1.0¢ per 1,000 BTU.
Except for the fact that I pay $1.60, not the $2.86 you use to figure costs.