Should you pre-buy home heating oil?

Answer 1

There are a couple of ways to pay for Home Heating Oil, one is "Budget", a set amount is deducted from your bank account or applied to your credit card on a Monthly basis, usually from Sep to Jun, at which time if there is a debit amount owing a letter will be sent allowing you to pay the balance over the Months of July and August, if there is a credit amount, you may be able to apply this to the next heating season or obtain a refund.Depending on your oil consumption this amount may go up or down and will determine your budget payments. Another way is to pay from the statement date, usually 30 days, also you can choose to pay cash at the door or have it "pre-authorized" using a credit card prior to delivery. As to "pre-buy" I cannot think of any use this would be to the home owner, actually if you pre-buy at the current rate and the rate drops during delivery, you will be out if the price is lower, not very feasible. One thing that has been happening lately on the East Coast is a lot of companies are offering to "lock-in" the price for you over the heating season, they offer other incentives with this, such as discounts depending on potential volume, however, because it is an agreement between you and the Oil company and the price drops below what you have agreed on, you are obligated to fulfill your part of the agreement and continue to purchase at the locked-in amount, however you can always cancel your account to get around this, but historically during the cold season the prices will rise and during the summer drop.So it is a gamble for both the Oil Company and the end user, as the Company purchases it's Oil in advance of the heating season and will allocate a certain amount to be used for the locked-in program, so if the cost to the company is high and the price drops below what they paid, then they are taking a loss, where as if the price continues to go up, then the Company has protected you.