Why should you be thinking about home heating oil when it's summer? Summer is when oil delivery companies offer customers the opportunity to pre-buy home heating oil and lock in the price for the next heating season. These programs seem to be more common in the northeast which can have very cold winters.
So let's explore the concepts here so you can make the “Price is Right” decision for your budget.
Who Sells Home Heating Oil?
There are 2 different types of “Fuel Oil Companies” you can work with. Their business is selling and delivering oil to homes and businesses in their service area. Depending on where you live, you'll have just a few choices or 100s in highly populated areas like Long Island, NY.
Full Service Fuel Oil Companies – They not only sell fuel oil, but offer a wide range of related services including automatic delivery, 24 hour emergency services, installation of new equipment (boilers, furnaces, burners, hot water heaters, etc) and maintenance of your existing equipment. For most home owners, an annual service contract is very important as you get:
- Annual cleaning of your equipment to make sure it's running efficiently.
- Automatic delivery so you don't have to monitor your fuel tank.
- 24 hour emergency service so when there are problems, help is just a phone call away.
Discount Fuel Oil Companies – Typically these companies only deliver oil on a cash basis. These discounters are able to offer competitive oil prices by focusing on buying and selling oil. Home owners who choose this approach have the flexibility of comparing prices across multiple companies each time they need more oil. The trade-off is the time and risk to monitor fuel consumption and finding the lowest price each time.
Today's Choices for Buying Home Heating Oil
With the recent spikes in home heating oil prices, many full service companies are creating different options to allow you to “lock-in” your price for an entire heating season. This might be a new idea, but it's very similar to your mortgage. When you buy your home, the price is fixed. The interest rate for your mortgage is fixed unless you go with a variable rate, so the only costs that vary year-to-year are taxes and insurance.
A common misconception that home owners have about oil companies is … they're buying oil at a low price and selling at a higher price. That's true. Costs include buying the oil, the land and tanks to store the oil locally, the trucks to deliver the oil, typical business costs from billing to marketing and more. There needs to be profit to reward business owners for the money and time they invest, along with the risk they take. Lamprey Brothers in southern New Hampshire minimizes their risk, along with their customer's risk by offering fixed price options. When they announce a program, the window to sign up is just 7 days. They bundle orders from multiple customers and use the same strategy, pre-buying from their suppliers.
At a recent workshop, Lamprey shared the details of their “Pre-Buy” programs. While each company's plans are different, the concepts here are what home owners need to understand as you research the different companies in your local area. At the Association of Women Home Owners, we offer this type of meaningful information so you can manage decisions related to your home more comfortably and confidently!
- When you buy for the entire heating season, you get a volume discount.
- When you pay up front, you're able to lock in a fixed price for a year's worth of oil.
- Insurance protects you went the market price drops below your fixed, “pre-buy” price.
- Financing lets you make monthly payments over 9 to 12 months.
Cost = Home Heating Oil – Volume Discount
+ Insurance (optional)
+ Financing (optional)
My thanks to the Lamprey team for helping me learn about this important subject … Don for an excellent presentation and Amanda for arranging the workshop. Looking forward to learning and sharing more, here at Home Tips for Women.
Thank you for sharing. It is so interesting to me about hiring a heating oil company. I think its a great article and I learned a lot.
Thank you for talking about the importance of hiring a heating oil company that can take care of your equipment. It is important to remember that keeping your system clean and well maintained can help you save on oil and avoid any accidents. I can see how anyone who is looking into this would want to make sure they talk to several companies and find the one that offers the services they need.
I think it is really awesome that oil companies will allow you to “lock-in” your price if you use them for a whole season. That is really nice, especially since the prices do tend to rise and fall all the time. Since I just closed on a house that uses heating oil, I’ll be sure to take advantage of this advice as soon as possible. After all, I am sure a lot of oil companies offer a lower price in the middle of summer.
Maggie, Congrats on your new home. As I wrote this a few years back, you might want to check on prices for the last 2 years because fracking has driven prices down & the US is less dependent now on imported oil. When you call oil companies, don’t get discouraged if a few don’t offer this option but I will tell you the ones that do are running their businesses more effectively, in order to make this offer. The timing of these offers also corresponds to when they have to sign their contracts, as I learned about this by attending a seminar.
This makes me think when it was last witnessed that the cheapest heating oilwere available in the market and offer the price it was being offered at.
Andrew, It looks like your company sells heating oil across the UK but in the US, our oil companies are local based on their distribution network. I wrote this article after attending a presentation by one such company, and even they have to decide when to buy their supply many months in advance … so today’s price is really based on the market 6 months earlier.