Propane and Heating Oil Fixed Price Contracts – What Happens if the Price Falls?
You locked-in your propane or heating oil price last July, 2010 and since then prices have risen over 30%. Good decision. Now you’re looking to sign up again for the 2011/12 heating season. Prices are high and you are concerned about what happens if prices fall?
If you purchase a fixed price contract, you’re signing a legal document. As part of the contract you are required to take full delivery of the gallons in the contract. When the market price drops below your fixed price, some consumers believe that the heating company is making a big profit. This is not true. Heating providers are required by law to secure propane or heating oil they sell at a fixed price so they can honor their commitments to their fixed price customers through the season. Therefore, even if the market price drops below the fixed price, the heating company is in the same boat as you – bound by the price they locked-in at when they purchased your gallons. When signing up for price protection, you should review the contract in detail and if you have any questions, you should talk to your heating provider and ensure you get clear answers.
If you are very concerned about the price dropping, then you can select variable pricing. Variable pricing allows you to get the market price on the day of delivery. Or, you can select downside protection. For an additional fee, if the price of fuel increases you will pay no more than the fixed price. But if the price of fuel decreases, you pay the lower price.
Deciding whether to sign up for a propane or heating oil price protection plan is a big decision. Take comfort in knowing that Irving Energy will provide you with the resources and information you need to make the best possible decision this heating season. View our heating oil and propane price protection plan and payment options. If you have any questions and want to talk to a knowledgeable Irving representative, feel free to give us a call at 1.888.310.1924. We’re here to help.
Check out our other articles on price protection, read heating oil and propane price protection consumer opinions, or answer the questions: is heating oil and propane price protection right for me? or what is heating oil and propane price protection?
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Posted on May 31, 2011