Nowadays, heating oil prices are getting expensive. Especially so in the northeastern United States. This is often due to its ability to heat the home reliably and its capacity to produce a lot of heat. That can lead to high energy bills during the winter months of the year. If you’re afraid that prices are going up even more, then you might want to contact your heating oil company to lock in a price. But, should you? In this article, I’ll be answering whether or not locking in a price for heating oil is a good idea or not.
Varying Heating Oil Prices
How heating oil is priced, can tend to be pretty complex. The price per gallon is different depending on weather or not you’re using automatic delivery or call-by delivery. I discuss the major differences between them on our blog here. But it’s important to know that call-by is typically cheaper than automatic.
Now, I’m not saying that you shouldn’t sign up for automatic delivery. It’s very useful and convenient! However, it’s important to note that it’s more expensive than call-by is. You’ll end up paying more money annually than you should be for heating oil. But, keep your options open and I’m sure that you’ll end up finding a price that’s good for you!
Heating Oil prices can vary depending on a multitude of different factors. One of the biggest reasons for this is what the dealer gets oil for at the pump. Like all businesses, they need to make a profit too. So what prices they charge depends on that first and foremost. However, global crises can impact pricing as well. COVID-19 is an example of this where oil was as low as it could get. Demand also plays a major roll in this. In the winter time, you’ll often see prices at their highest, because everyone wants heating oil to heat their home.
Market Pricing Through Automatic Delivery
If you’re going to go through Automatic Delivery, then understand that you’re going to be charged whatever the current rate is. This rate will usually depend on what the dealer sets it to. They’ll do this by taking the price that they pay for oil and adding an additional .80 to $1 per gallon. Now, it’s important that you understand that this is roughly 50 cents more than what you should be paying. Make sure you remember that if you want to order with automatic delivery. With automatic pricing, you will be locking a price per gallon, that is much higher than the base market price.
Market Pricing for Call-By Delivery
When you compare market pricing of call-by to automatic, call-by is usually always cheaper. This is because call-by delivery tends to be more competitive than automatic. It tends to be more competitive because you’re free to shop around for the best price. This incentivizes dealers to make the price per gallon lower, so that you buy their oil. These dealers want your business. Which is why they’ll mark down the price per gallon for will-call delivery. But, using helpful websites like FuelSnap, you’ll be able to get a better idea of what the best prices in your area are.
Fixing the Price Per Gallon: What some dealers will do is offer you a fixed price per gallon. How this works is you and your dealer will come to an agreement for a permanent price for your deliveries for a specific amount of oil. How much oil this regular scheduled delivery is depends on your yearly usage. However, while you’re locking in a price per gallon there might be additional fees mixed in there. This is why fixing a price per gallon tends to be a little bit of a double-edged sword. Even if the price decreases per gallon, you’re still going to have to pay the agreed-upon price with your dealer.
Capping a Price: Price capping tends to be a bit more enticing to the customer from the dealers end. What this pricing plan entails is that you’ll only have to pay up to a certain price. Does it sound too good to be true? Well, that’s because it is. With this plan, you have to pay a fee up-front, or the oil price becomes inflated. This means that they can simply charge you more to make a profit. Similar to fixing a price, if you cap a price and the price per gallon goes down, then you will still pay the capped price that you agreed on with your dealer. Your dealer is not required to drop the price if the price per gallon goes down.
Getting the Best Price Per Gallon
If you’re looking to save money on heating oil costs, then I highly recommend reading up on our article “The 10 Best Ways to Save On Heating Oil Costs”. There, I breakdown what the best ways are to save money on heating oil and break down which ways are best. But, when it comes to getting the best price per gallon, it’s safe to say that you should go with call-by delivery. This gives you the ability to shop around for the best prices available to you. But rest assured, when you order through call-by, you’re locking in a price. This means that after the order has been placed, the dealer CANNOT change the price per gallon.
If you decide to go with call-by delivery, then it’s best for you to go with our FuelSnap website. This is because we give you all the local dealers available to you on our program. You’ll be able to get the best price available to you on there! But, if you’re loyal to a particular dealer and they aren’t on there, please feel free to request them! You can also continue to order from them if you don’t want to order through FuelSnap!
But if you decide to do automatic delivery, we recommend that you pay the market price for it. Doing so will ensure that you don’t have to worry about extra fees or additional costs when you get your delivery! Just keep in mind that while this does give you a piece of mind, it can be more expensive and will cost you more money in the long run.
Happy Heating,
Hunter
