Propane and Heating Oil Downside Protection: Reasons For and Against
Adding downside protection to your fixed price heating oil or propane purchase may be a good investment this year. When you add downside protection to your fixed price, you pay no more than the fixed price, but if the price of fuel drops, you pay the lower price. Think back to June 2008, Wall Street was melting down, crude oil was in the stratosphere and everyone was fearful that home heating oil prices were headed to $6.00 per gallon. Many consumers purchased fixed price heating oil contracts at $4.50 per gallon in the summer of 2008 only to have the price drop below $3.00 per gallon during the winter. Those who purchased downside protection were able to pay the $3.00 per gallon, while those who didn’t paid $4.50 per gallon – their contracted fixed price.
|Reasons to Sign Up||Reasons Not to Sign Up|
|• Heating oil prices could easily go up or down|
• You want to benefit from lower prices should prices go lower
• Benefiting from lower prices should they go down outweighs the price of the downside protection fee
|• You aren’t willing to pay the extra fee for downside protection
• The price of heating oil or propane would need to fall by more than the added cost of downside protection for you to benefit
• You aren’t worried about where heating oil and propane prices are headed
• You are OK with having a fixed price that won’t go lower should heating oil or propane prices drop
Whatever you decide, Irving Energy encourages you to have all the facts and weigh the benefits so you can make a decision that’s right for you. Take comfort in knowing that Irving will provide you with the resources and information you need to make the best possible decision this heating season. 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.
View our heating oil and propane price protection plan and payment options. And, check out our other articles on price protection or answer the question: is heating oil and propane price protection right for me?
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Posted on June 1, 2011