Home Heating Oil

[MoroneSaxatilis]

I'm caught on the horns of a dilema. Trapped between a rock and a hard place. Do I "lock in" with a Big Oil conglomerate at around $2.83/gal for the winter, or continue to shop around for the lowest cash price ($2.23/gallon today) and gamble that home heating oil won't make it to $3.00+ this winter?

[Mugz]

I locked in till May at 2.54 a gallon. Just got a full tank that cost $500.
Ouch......

[MoroneSaxatilis]

I had the chance to do the same back then, but I gambled and lost. the question is, what do I do NOW?

[chief10]

I took advantage of locking in for a season a couple years ago. the only problem was the oil company kept coming by to fill my tank, like every week. I usually order when I need 150 gallons. not 10 or 20 gallons. I was constantly getting a bill from them.then when the prices went down in march they wouldn't match the price, they tried to tell me I had to pay the locked in price until may. I'd get a full explanation. I caved in to my father in law and his doom and gloom speech. never again.

[MoroneSaxatilis]

I've been locking in with a contract price for the last 2 years and it paid off in the long run. (Did I just answer my own question?). It seems that the lock in price is quite a bit higher than the cash price at the time of the lock-in but by the time a year goes by the contract price is lower. I hear what your saying though about unwanted deliveries.

[fishweewee]

Posted price: The "pump" price that fluctuates with NYMEX heating oil futures. If you are a variable price customer, usually you get a slight discount (say, a nickel a gallon) off of the variable price per gallon. If you know that prices aren't going to go up or will drop sharply, this is the way to go.

Cap price: Price goes NO HIGHER than a pre-determined price (say, $2.199/gal) throughout the season. If the "posted" or variable price drops below the cap, then your price follows the posted down accordingly. If you expect a sharp rise in heating oil prices, this is your best bet at upside protection.

Fix price: "locked in" price per gallon that says the same for the entire season. Usually, your h.o. company will obligate you to buy x number of gallons. If prices go down, you could get screwed on a fixed price contract, as you are obligated to buy x gallons at x price.

Rule of thumb for New England residents: the average New England home burns 1,100 gallons of heating oil a year, and usually gets something like 5 deliveries.

A warmer than average winter DOES NOT NECESSARILY MEAN PRICES WILL GO DOWN. A COLDER THAN AVERAGE WINTER VIRTUALLY GUARANTEES THAT PRICES WILL GO UP.