Question For Northerners With Oil Heat About This Page:

[simbarel]

Can someone help me with contracting oil prices. I've heard that you can sign a contract in the summer and then your rate won't jack up in the winter. I called our oil company today, and they would make us pay on a monthly basis based on last winter. So $XXXX divided by 12. My question is, before I start calling around every oil company in town, is this typical procedure to lock in a rate? To have your payments spread over the year, when we only truly use it for 5 or 6 months? Plus, I thought hte lock-in rate was kind of high ($.28/gal higher than what I paid today to fill the tank...which I think will take me well into the fall.) The lady said that if the rate dipped lower on my delivery date, then we'd get the lower rate. I don't get it. So why do I have to pay every month.

[Teresa]

We don't have it now, but my mom did at my childhood home, and just switched to electric a couple of yeears ago.

She was on a budget contract. Say you spent $2400 last year (or the house took). Then, based on that, you pay them $200 a month, and at the end of the year you either get a credit, a refund check, or a bill for the difference.

You save absolutely no money, but this way, you are not hit with the "surprise" bill of $800.
Mom also made sure that they left a statement of how much $$$ the bill would have been based on the amount they put in. That way, she could budget if there was a large payment due at the end of the year.

You could try calling around, but at least in Indiana, they all have "contractual areas" and WILL NOT go into another company's area.

And, there are a lot of electric and gas companies that do this, too.

[Belle*]

We have what is called a price cap contract - basically for a $25 fee we are guaranteed that we will pay no more than $xx/gallon between September and May no matter how high the price goes. (This year it was $1.49/gallon I think.) Other companies offer what you were offered which is a budget contract like Theresa described. This helps keep you from getting a shock when you look at the delivery invoice but you may get a nasty bill at the end if oil was much more expensive this year compared to last year. The other option some companies offer is to buy oil in advance. For example, you pay the current price for 1000 gallons of oil and they fill your tanks until you run out. This only helps you if the price of oil goes up. If it goes down, you are out of luck and paid too much.

Good luck!

[Colexis Mom]

Good luck Rachel We've never done it, although I know plenty of people around here who do I just wait for the tank to get below 1/4 and then I call them to deliver!

[rescuesk]

Not to complicate things, but some companies offer a discount if you go on the budget plan. We are on the budget plan, with a cap price (the price can go up, but only to the amount of the cap. If the cost goes over that, we do not pay more than our cap) and we make the same payment each month from August till June. In July, they compute the remaining credit, and we then get a 10 cent a gallon discount for being on the budget plan all year. We opt to get it credited towards next years budget, but I think you can get a check back, too.

I prefer having a monthly steady bill so that I know how much to expect.

[Joanne929]

We usually get a big delivery (maybe 200 gallons) in late October/early November and then another 3-4 deliveries through May. Those deliveries are usually less than 100 gallons each time. It takes me all year to pay off the oil company, so a budget is probably a good idea.

[JoanW]

I'm not a true Northerner, but we do have oil heat. The first year I was on the budget plan. I personally did not like it, as they had no idea what our oil usage would be. After the second year, I went to monthly billing. There was no advantage for us to use the budget plan.

As for the price cap, our agreement is that we sign up for a maintenance contract, which includes two annual cleanings of the furnace and air conditioner. This provides us a price cap of $1.39, where the price will not go over $1.39. We typically get oil in November, Decemeber, January and February. It's rare that we get oil delivered in March through October, but we are warmer than Maine and Massachusetts. My bill has never been more than $350, and sometimes is as little as $100, especially if it was a warm winter.

We had a heat pump, and when that died, we converted to oil heat. I've been very happy with the whole system and did it in 1998.
Here in Maryland we have many choices of oil companies, and we called all around before we chose the company that delivers oil now.