Heating Oil Pricing 101: Part 2 of 2

In our last post, we talked about the many factors that combine to make predicting oil prices next to impossible. That unpredictability makes it difficult to choose the best way to pay for your oil in a given year – which is why we offer several options for doing it.

Here in Part Two of our Heating oil pricing 101 post, we’ll talk about those options in more detail.

Heating oil pricing options

When it comes to choosing a heating oil pricing plan, it pays to be informed about your options so you can choose the plan that’s best for your budget and tolerance for risk.

Heating oil suppliers (including us) typically offer two basic ways* to pay for your heating oil: market price and price cap.

• Market Price – The market price for heating oil changes from day to day, with no price ceiling or floor. If you choose to pay market price, you’ll benefit from falling prices without paying a fee – but you’ll also pay more for your heating oil when the price rises. Market price is the least predictable of the three options listed here.
• Price Cap – A price cap program limits how high your heating oil price can rise – but not how far it can fall. To put it another way, you’re protected against rising prices while still being able to take advantage of price drops. However, you will pay a fee for this service; the fee covers the cost of insurance to protect against falling prices when we purchase oil from our suppliers for the season (the fee only covers the cost of the insurance; we don’t profit from collecting it).

Either of these options has its advantages and disadvantages – and as we mentioned earlier, much of the decision about which plan is right for you depends on your tolerance for risk. If  you have a little gambler in you, market price might be a better option. If you don’t mind paying a fee for your pricing plan, a Price Cap will give you the best of both worlds.

If you’re already on a pricing plan, we recommend sticking with it rather than trying to jump from one program to the next trying to time the market.

Need help in choosing a heating oil pricing plan that’s the right fit for your family? Contact us today – we’re happy to talk about it. Price Cap enrollment is open now – even if your current plan has not expired. Contact us to enroll today!

*Either of these options can also be combined with a pre-buy or monthly payment plan option – learn about the complete range of our heating oil pricing plans and other buying options here).