Lock in oil price or not

[Tree0164]

Hi
I got a letter from my oil company this past week regarding oil prices. They gave me two choices They based my usage from previous years with them.
Choice A Price protection
I can lock in the price of $2.89 a gallon for the upcoming winter season. I would pay a one time fee of $84 to do that and my monthly payment would be $77. If prices go lower, I would get a refund at the end of the year.


Choice B Price lock
Or I can get a price lock at $2.89 no participation fee and monthly payment would probably be $77. If prices go lower no chance of refund.


This past year we were locked in $2.39 a gallon.

What would you do?

[VJW]

Normally, that’s a tough call to make. Last Fall, fuel oil was at $2.50/GAL but then it fell dramatically to under $2.00/GAL, then went shooting back up again. However, yesterday, RightWing pundit Bill Kristol claimed that a “senior administration official” told him that the timeline to resolve their “problem” with Iran is 12 months. He said by that time “we will have diplomatic success, or we’ll have success through pressure and sanctions, or we’ll be forced to use military action…”.

Never mind that these people are Looney Tunes, just look what this administration’s saber rattling has already done to the world price of oil. Just imagine what will happen when they ‘kick it up a notch’ as Emeril would say.

As to your specifics, yesterday the wholesale price of fuel oil closed at $2.00/GAL, and it’s been my experience that the spread to retail is about $.40 to $.45, so I would check around on your price. However, I think locking in would not be a bad idea, as I don’t see the price going down much with desperate people in office making desperate moves.

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[Broken Arrow]

Well, it would seem that the known difference between the two choices is the $84 lock in fee.

I typically refuel about twice a month. That's roughly 100 times per year. In other words, that $84 lock in fee would amount to $0.84 extra each time I go to the pump.

So, assuming a 10 gallon fuel tank (again, calculating for myself) for the lock in fee to break even versus not locking in, the fuel prices has to increase by an average of $0.085 cents over the course of the next year.

All of this is a very rough estimation of course, but the bottom line is, if you believe that the average fuel prices will increase by at least $0.09 than what it is already now, then yes, it'll be worth it to lock it in. At least, it would be worth it for myself.

I didn't factor in the refund incentive because I don't personally believe that gas prices will drop anytime soon. I could be wrong though.

[banana]

I received info on prepaying also.

We have the following options:

prepay for $2.499 a gallon, must purchase at least 500 gallons. No refund if price drops lower than $2.499 a gallon.

Go on the budget plan for 10 monthly installments and they will deliver at $2.559 a gallon. No refund if price drops below $2.559 a gallon.

I dont know where you live but I would definitely shop around a bit. I think $2.89 seems a little high to me. Could the price be higher because you are not using whatever their minimum amount is (like mine is 500 gallons a year)?

[Tree0164]

I did a little comparsion shopping. And 2.79 was the lowest price. I don't think I am going to switch based on 10 cents. They have great emergency service came out to us in the middle of a blizzard when our furance died.

[banana]

Emergency service does make a big difference!