Posted by Joe on September 6, 2006, 6:25 am
I'm wondering if I should lock in my oil price this winter. I've never
had to deal with this and it seems that oil prices are coming down so
is it worth the risk not to lock it in? I can get a $2.59 lock in today
but there is another company that does not offer lock ins that is
offering $2.30 today. How much does heating oil go up in the winter? Is
it always a good idea to lock it in even when prices are receding from
their historic highs?
Posted by Joe on September 7, 2006, 6:29 am
They've come down about 10 cents here in the northeast in just the last
two weeks. Obviously you can't predict when to lock in the price but
I'm just wondering if people just lock-in during a certain month when
prices have been known to be historically low. A friend of mine tells
me he always locks in during March. Just trying to see what the most
frugal people on the internet are doing.
stephandlulu@gmail.com wrote:
> Oil prices might come back down....
> they are in Ga.
> Steph
> > I'm wondering if I should lock in my oil price this winter. I've never
> > had to deal with this and it seems that oil prices are coming down so
> > is it worth the risk not to lock it in? I can get a $2.59 lock in today
> > but there is another company that does not offer lock ins that is
> > offering $2.30 today. How much does heating oil go up in the winter? Is
> > it always a good idea to lock it in even when prices are receding from
> > their historic highs?
> >
Posted by jw on September 7, 2006, 1:02 pm
Joe wrote:
> I'm wondering if I should lock in my oil price this winter. I've never
> had to deal with this and it seems that oil prices are coming down so
> is it worth the risk not to lock it in? I can get a $2.59 lock in today
> but there is another company that does not offer lock ins that is
> offering $2.30 today. How much does heating oil go up in the winter? Is
> it always a good idea to lock it in even when prices are receding from
> their historic highs?
Does it cost you anything to lock-in? Sometimes it's percentage,
sometimes it's a set price(ie $.10/gal) that you need to pay up front.
Determine what that cost is to you.
The next question is determining how much you want to lock-in. Every
time I have done this they want to know X number of gallons. If you
dont' get enough, you will be subject to market price when you run out.
Allocate too much and you will have a balance at the end which will be
"extra" money you paid and should get reimbursed(or you may have to
carry to the next year).
That leads into the next question: What happens if you do have a
balance? Some reimburse at the end of the season, some make you carry
it, some just cancel it.
Also, if the price goes down, are you required to use fuel from your
reserve or can you buy at market rate?
FWIW: I used to do this, but have found that it is generally about a
wash. I would rather not deal with it and not have to put money out
there speculating that it will go up.
JW
Posted by Gene S. Berkowitz on September 7, 2006, 9:54 pm
cyberzl1@yahoo.com says...
>
> Joe wrote:
> > I'm wondering if I should lock in my oil price this winter. I've never
> > had to deal with this and it seems that oil prices are coming down so
> > is it worth the risk not to lock it in? I can get a $2.59 lock in today
> > but there is another company that does not offer lock ins that is
> > offering $2.30 today. How much does heating oil go up in the winter? Is
> > it always a good idea to lock it in even when prices are receding from
> > their historic highs?
>
> Does it cost you anything to lock-in? Sometimes it's percentage,
> sometimes it's a set price(ie $.10/gal) that you need to pay up front.
> Determine what that cost is to you.
>
> The next question is determining how much you want to lock-in. Every
> time I have done this they want to know X number of gallons. If you
> dont' get enough, you will be subject to market price when you run out.
> Allocate too much and you will have a balance at the end which will be
> "extra" money you paid and should get reimbursed(or you may have to
> carry to the next year).
>
> That leads into the next question: What happens if you do have a
> balance? Some reimburse at the end of the season, some make you carry
> it, some just cancel it.
>
> Also, if the price goes down, are you required to use fuel from your
> reserve or can you buy at market rate?
>
> FWIW: I used to do this, but have found that it is generally about a
> wash. I would rather not deal with it and not have to put money out
> there speculating that it will go up.
>
> JW
My oil dealer offers a price lock that is good from September to May.
You put a $100 deposit down, which is credited against the first
delivery after March. For an additional $50 they offer "downside
protection", whereby if their price of oil drops, you get the lower
price; without this extra $50 you pay whatever price you agree to when
you sign the contract. You must agree to automatic delivery to get the
lock. The price per gallon is also contingent on you paying within 10
days, otherwise it's $0.10 higher. The price you are quoted depends on
the market price that day. Under this plan, you do not have to use/buy
a fixed amount of oil.
They also offer "budget" plans, where, based on your past usage they
calculate how much oil you will use all season, price that, and divide
by the number of months in the contract, so you get a regular bill every
month, rather than paying lump sums for each delivery. I think the
prices on the budget plan are slightly lower than the locked price plan
above.
--Gene
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> they are in Ga.
> Steph
> > I'm wondering if I should lock in my oil price this winter. I've never
> > had to deal with this and it seems that oil prices are coming down so
> > is it worth the risk not to lock it in? I can get a $2.59 lock in today
> > but there is another company that does not offer lock ins that is
> > offering $2.30 today. How much does heating oil go up in the winter? Is
> > it always a good idea to lock it in even when prices are receding from
> > their historic highs?
> >