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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 UpReasons 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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Propane and Heating Oil Fixed Pricing: Reasons for and Against

When you fix your heating oil or propane price, your per gallon fuel price is locked in until a specified date in your contract or until you have consumed the gallons purchased in your contract. No matter where fuel prices go, your price remains the same.

What are the reasons for and against heating oil and propane fixed pricing this year?

 

 

Reasons to Sign UpReasons Not to Sign Up
• Uncertainty in heating oil and propane prices
• You don’t want to gamble with you home finances
• You don’t want to risk the price of heating oil or propane increasing
• You want the peace of mind of knowing exactly what you’ll pay for home heating
• Knowing your fuel price makes it easier for you to budget
• You don’t want to lose out if the price of heating oil or propane drops, and get stuck paying a higher price
• Although no one knows where prices are headed, they can certainly drop throughout the heating season
• You would prefer to see what happens with the price of heating oil or propane rather than locking in a set price
• You don’t want to sign a legal contract for price protection

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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Propane and Heating Oil Variable (Market) Pricing: Reasons for and Against

When you choose to pay a variable price for your heating oil and propane, the price you pay is the price per gallon at the day of your delivery. Heating oil and propane prices fluctuate up and down daily because of many market factors. What are the reasons for and against choosing to pay a variable price?

 

Reasons to Go VariableReasons Not to Go Variable
• You don’t want to pay for the additional costs with fixed pricing or downside protection
• You don’t want to sign a legal contract
• Heating oil and propane prices are unpredictable, and you don’t want to make any commitments since prices might drop
• Knowing exactly the price you’ll pay for fuel is not very important to you

• You want to know exactly what you'll pay per gallon in heating fuel
• You want to know your fuel cost so you can budget
• You’re uncomfortable with not knowing how much your next heating oil or propane delivery will cost

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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Propane and Heating Oil Price Protection Plans – The Big Five Misconceptions

There are some common misconceptions when it comes to propane and heating oil price protection plans. And since heating your home is a big expense, it’s important that you have all the right facts so you can make a smart decision about price protection this year.

 

Misconception #1: When the price for propane or heating oil drops below your fixed price, your heating provider is making a big profit. A reputable heating company secures their propane or heating oil at a fixed price from their supplier at the same time the homeowner does from his/her heating company. This ensures the heating company has enough supply to honor their commitments to their customers through the heating season. Even if the market price drops below the fixed price, the heating company is committed to their contracted price to their supplier, just as the customer is committed to the fixed price given by their heating company.

Misconception #2: The heating company knows where the price of oil will go. There are many factors that affect the cost of oil, including global demand, available inventory, Wall Street speculators, the value of the US dollar and the weather. These factors are unpredictable and uncontrollable. Therefore, it would be impossible for a heating company to predict the price of oil over time.

Misconception #3: Fixed price is the same as downside protection. Fixed price propane and heating oil contracts lock-in a set amount heating fuel gallons at a fixed price per gallon. Fixed price contracts protect customers if the price of oil goes up. However, if the price drops, customers who locked-in still must pay their locked-in price.  Downside protection is a bit different.  With downside protection, customers pay no more than a fixed price per gallon, but if prices go down, they pay the lower price per gallon. Customers with downside protection benefit if the price goes up since they will not pay more than the locked-in price. But if the price goes down, they will pay the lower price for an additional fee.

Misconception #4:  You have an unlimited time to use the gallons you agreed to purchase. Price protection has an end date.  Your contract with your fuel agreement ends when you’ve used all the gallons contracted for or at the agreed upon end date.

Misconception #5: A Price protection plan usually saves you money in the long-run. This is not always the case, and customers should be aware that prices can drop.  For example, in 2008, the price of oil was climbing quickly and people speculated that it would go higher than it ever did before. Fixed price heating oil contracts averaged $4.85 per gallon during the 2008-2009 season. But by the end of 2008, heating oil prices dropped to $3.00 per gallon.  And In 2008, a customer who was on a variable plan paid less to heat their home or business than someone who locked-in their price at $4.85. With this example, a customer with downside protection would have paid a lower price per gallon.

Take comfort in knowing that Irving Energy will provide you with the resources and information you need to make the best possible decision this upcoming 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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Propane and Heating Oil Price Protection Plans – Is it Right for You?

It’s impossible to know exactly where propane and heating oil prices will end up. So if you can’t base your heating oil or propane price protection decision on where heating fuel prices will go, then what questions should you ask yourself?

For some homeowners, price protection is beneficial no matter where prices are headed. A price protection plan lets you know exactly how much you can expect to pay to heat your home. This makes it a lot easier for homeowners to budget their expenses.

Here are five questions to help you decide if price protection is right for you:

  1. Knowing that you can’t predict the future price of heating oil or propane, how important is it for you to know what you will pay per gallon in the upcoming heating season?
  2. Do you typically pay for large purchases all at once or in equalized monthly payments?
  3. Would you feel frustrated if a high-priced item went on sale after you bought it?
  4. Do you typically pay a little extra for insurance when you purchase items like major household appliances or electronics?
  5. Do you set and stick to a budget for your expenses or do you like to pay for things as they come up?

The more you answered “yes” to these questions, the more you should consider locking in your heating oil or propane price this year. If you’re still undecided, then be sure to check out or Interactive Decision Tool, where you can find out if price protection is right for you.

Take comfort in knowing that Irving Energy will provide you with the resources and information you need to make the best possible decision this upcoming 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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