Thoughts on pre-buying heating oil at a locked-in price?

[Lord Ash]

Hey all!

Just wanted to get some opinions... I live in northern NJ, and we just got our option from our heating oil company to "pre-buy" our oil for the next year. The advantage to "pre-buying" is that you lock in a price; in this case, $3.85 a gallon, plus a 30 cent fee... so really $4.15 a gallon.

Normally we always do this... but this seems REALLY high for a projected estimate... last year the "locked in" price was $3.04, with only a $.20 buy-in... then again, I have no idea what projected estimates are for heating oil. Just because we are really torn, does anyone have any opinions on this? Is it worth paying, in effect, $270 of insurance (900 gallons a year x $.30 a gallon) to protect against oil going over $3.85?

Anyway... we are torn, so I thought I'd ask folks opinions:)

[DukeUsul]

Hey all!

Just wanted to get some opinions... I live in northern NJ, and we just got our option from our heating oil company to "pre-buy" our oil for the next year. The advantage to "pre-buying" is that you lock in a price; in this case, $3.85 a gallon, plus a 30 cent fee... so really $4.15 a gallon.

Normally we always do this... but this seems REALLY high for a projected estimate... last year the "locked in" price was $3.04, with only a $.20 buy-in... then again, I have no idea what projected estimates are for heating oil. Just because we are really torn, does anyone have any opinions on this? Is it worth paying, in effect, $270 of insurance (900 gallons a year x $.30 a gallon) to protect against oil going over $3.85?

Anyway... we are torn, so I thought I'd ask folks opinions:)

Sounds like you need a hedge fund manager. Sorry, I'm not one. :-(

[Turk]

We learned the hard way that it's worth re-shopping every year. The oil business doesn't give returning customers any love, and the better deals go to new customers. I think your numbers are high and you can do better, especially if you know your typical annual consumption. Last winter, we tried a new trick - our best deal was to pre-purchase a fixed amount of oil. The company topped off the tank every couple of months. That worked out well. And make sure your vendor includes a service contract - free checkup / cleaning at the beginning of heating season - at no extra charge...

Wait a month, and then call everyone again and see what's changed... You don't have a deal that's worth locking down now...

[Brian913]

Buy COD from one of the guys that run the small ads in the newspaper. Get a plumber to do your maintenance. You will save a lot of money.