Welcome! Here are the website rules, as well as some tips for using this forum.
Need to contact us? Visit https://heatinghelp.com/contact-us/.
Click here to Find a Contractor in your area.

pre-paid oil, do I just suck it up?

D Murphy
D Murphy Member Posts: 10
> A couple years ago here in the Northeast most of <BR>
> the oil companies didnt honor their locked prices <BR>
> when oil went through the roof. Its not a level <BR>
> playing field and as usual, the little guy gets <BR>
> screwed. <BR>
> <BR>
> I've never pre-bought or locked in <BR>
> a price for a season. I've done COD for the 15 <BR>
> years I've owned my own home and I'm way ahead. <BR>
<BR>

Comments

  • GW
    GW Member Posts: 4,676
    pre-paid oil, do I just suck it up?

    I locked in about 75% of my oil usage; obviously it seems I’ll get hosed. Are there some polite ways to "not use" the oil? I'm not trying to be a crook; it's just sad to see the prices drop!

    Gary
    Gary Wilson
    Wilson Services, Inc
    Northampton, MA
    [email protected]
  • lchmb
    lchmb Member Posts: 2,997
    some companies

    The company I work for did offer a follow down insurance. Check your contract and see if it was included. Other than that, if they've been good to you, it was a gamble and this time it didn't pay off. Who's to say later in the year it won't pay itself back 2 fold...
  • Joe Grosso
    Joe Grosso Member Posts: 307
    oil lock in rates

    This is the risk you take just as the risk the oil company is taking that you will live up to your end. Be a stand up man if it was the other way around would it be ok for the oil company to raise your rate.It is a two way street.I am the owner of a fuel oil company so believe me I have heard this over and over this year.
  • Leo
    Leo Member Posts: 770
    It's tough all the way around

    When the oil company has a time limit for the customers to sign up they in turn have to lock in a wholsale rate. The oil company is committed to the supplier for a certain amount of gallonage at this rate. When the price goes up everyone wins. When it goes down the big suppliers win.

    Leo
  • Bill_55
    Bill_55 Member Posts: 11
    pre-buy-- sometimes you win and sometimes you lose

    I did a pre-buy for my oil this winter when prices were alot higher than they are now. The last couple of winters I also did the pre-buy and made out really well when oil prices shot up during the heating season. So, as other folks have said, it's always a gamble to pre-buy. It's a gamble if you don't pre-buy too-- you never know what's going to happen to retail prices during the heating season. At least with the pre-buy, you know up front what you're paying-- no surprises!
  • Tom_21
    Tom_21 Member Posts: 3
    Prebuy

    Do any of the consumers run to the oil dealers and offer to pay more when prices spike?...think NOT!...Tom
  • rox
    rox Member Posts: 23
    Yeah but..........

    A couple years ago here in the Northeast most of the oil companies didnt honor their locked prices when oil went through the roof. Its not a level playing field and as usual, the little guy gets screwed.

    I've never pre-bought or locked in a price for a season. I've done COD for the 15 years I've owned my own home and I'm way ahead.
  • D Murphy
    D Murphy Member Posts: 10
    I remember that.

    I didn't like that then and I still don't like it now. However I undertand the business of it..The letter I received, in December, from the oil company stated that due to unforeseen problems we have to raise our rates. Do you think that if the bottom fell out of the oil market (yeah right) they would send me a letter stating "due to unforeseen surplusses we have to drop the rate you locked in at? HAHA. Now that would be something!
  • Ken_40
    Ken_40 Member Posts: 1,320
    Gary,

    I too bought into the pre-buy plan. I knew the risks, and also realize the situation in the middle east is far from stable long-term. This momentary drop to under $60 a bbl. is not a wind-fall for oil companies on this issue. The futures options they buy to off-set price spike losses on these pre-buy deals is a tear up for them as well!

    Any of us could buy an oil futures contract that would off-set a price spike. It is far more effective a hedge howeever if the oil company or FMA invests on a large scale, rather than us individuals mess with that finacial instrument.

    The oil companies in fact make little if prices fall or rise dramatically over the entire heating season. But they can stabilize their, and therefore our, price per gallon wit this method. It is purely a "service" they offer to stabilize what may yet become a very hairy market.

    Given the games Venezuala, Mexico and the factions within the Mid-East play, OPEC's potential price disturbances, I'm glad to know my lock-in at $2.58 is there.

    I'd bet lunch at the restaurant of your choice the $2.58/gal. pre-buy will pan out as either a minor loss, or substantial savings. Hell, it's only November. We've got a long way to go before thinking we guessed wrong. Talk to me in May when the show's over (;-o)
  • Dan Goodridge_2
    Dan Goodridge_2 Member Posts: 5


    Prebuying oil is very similar to buying insurance.If you bought flood insurance , would you call up the insurance company and complain if there wasn't a flood
  • Woodman
    Woodman Member Posts: 13
    Insurance

    Well stated Dan...
  • GW
    GW Member Posts: 4,676
    thanks

    for all th words of wisdom. I enjoyed seeing both sides of the fence, I was stuck by the notion that oil guys nailed their customers for more cash when they were already locked in; bad bad. What a brilliant example that followed it; returning money to the customer if the market flops and goes down. never happen.
    Gary Wilson
    Wilson Services, Inc
    Northampton, MA
    [email protected]
  • Scott04
    Scott04 Member Posts: 69
    Oil companies

    I too remember when some oil companies reniged on the price locks. Every owner of every company that did, should have been sent to jail!

    My family owns a small oil company. We used to offer fixed price prepay plans. We did have a winter when the prices dropped. Everyones customers were unhappy, except for ours...they recieved a refund for the difference! After offering the fixed price for a few years, we started doing just capped pricing. In other words, if the price went up, you paid the capped price, if it went down, you paid the lower price. We charge no fee for this.

    When some oil companies were raising the price they were charging to prepaid customers, we charged the capped price. I guess we just have old time standards! BTW, if our word isn't good enough for you, go somewhere else! We have no contracts! Everything is verbal, the only thing in writing is the letter we send out explaining the program, and after the start of the program we send a letter stating that $XX has been applied for oil at $XX.

    Not the best business practice, there have been times we were losing money on every gallon sold, before figuring in our costs. In other words, we were selling it for less than we were paying for it.

    Not the best business practice, but then...we don't advertise, Don't have too, word of mouth gets us as much business as we can handle. We know our customers, they are not a number! We have been in business 60 years next June.

    I guess we may be doing something right!

    Gary,
    If you signed a contract, the oil company may be able to sue you for breach of contract. Also, with or without a contract, it boils down to: Are you a man of your word? If you are, why would you even consider trying to back out? If you're not, then you don't have much going for you.

    Scott
  • Ken D.
    Ken D. Member Posts: 836
    Pre-Pay

    I have been pre-paying for years. I have experienced a drop in prices under what I paid before, but the price drops have been short-lived. Usually the price goes back up as the season drags on and I've come out ahead. I'm sure this year will be no different. I have never had my supplier renege. One thing I like about pre-pay is I never have another oil bill until the next sign up period. As far as not using oil, the pre-pay contract I signed requires me to use my supplier only. I suppose you could buy COD, but you would have to time it so you could get the minumum delivery and not have your normal supplier find out. Sounds like fraud. Overall, I think pre-pay has been a good deal for me.
This discussion has been closed.