Price Protection Plan Basics - PGagnon
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The P. Gagnon & Son Blog

Price Protection Plan Basics

Posted: April 4, 2018

Choosing the heating oil price protection plan that’s right for you can be challenging, since oil prices can change so much from year to year. But like any buying decision, it pays to know the facts so you can make an educated choice.

Here are some heating oil pricing basics.

Heating Oil Pricing 101

There are three basic ways to buy heating oil – you can pay:

  • The market price, which changes daily, with no high or low limit;
  • A fixed price, which locks in a heating oil price for the gallons you buy, no matter what happens in the market; and
  • With a price cap, which limits the maximum price you will pay for oil, but not the minimum price you could pay if prices drop. Price Cap programs always come with a fee, which covers a dealer’s cost to insure the gallons they buy in case prices fall. 

When we talk about “price protection,” we’re referring to buying your fuel oil at either a fixed or capped price, which protects you from swings in market price.

Simple Pay – our Budget Plans”

To add another consideration to the mix, most heating oil providers also offer some kind of budget plan (ours is called SimplePay), which divides your annual bill into equal payments based on an estimate of the amount of heating oil you’ll use in a typical year.

Our take on re-upping your price protection plan: “If it ain’t broke…”

It pays to remember that while price contracts are meant to provide cost certainty, there really is no way to shield you from the market volatility that comes with buying a commodity that trades in global markets.

That’s why we recommend sticking with the same plan every year, rather than trying to jump from one program to the next trying to time the market.

If you’re new to price protection, remember that each of these options has its advantages and disadvantages – and much of the decision about which plan is right for you depends on your tolerance for risk. If you need some guidance to choose the right plan for your home and family, just let us know .

Need help in choosing a Pricing Plan that’s the right fit for your family? Contact us today – we’re happy to help! If you were signed up for a price protection plan last year, you should have received your new contract in the mail for next heating system – please let us know if you didn’t.