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August 22, 2008
Oil Heat Price Lock
My oil company just sent us a price lock agreement for the heating season.
For 9/1/08 - 5/31/09 we will pay 3.99/gallon of heating oil delivered.
I think over the winter last year it got close to 5.00/gallon.
Do others on this board sign such agreements?
Is yours at a similar price?
I have considered trying to create my own price hedge by buying a heating oil shares...
http://finance.yahoo.com/q?s=uso
But have never actually done that sort of thing before...
Comments
Very common. I do them for homes that I heat with oil outside of NY. Although I was speaking with my supplier last week they have not agreed yet as to when to lock in the price. Some companies traditionally do this in June/July and anyone that locked prices in back then paid a much higher price.
It's a difficult decision now for the heating oil suppliers. On the one hand it looks like crude will continue to trade lower BUT as we get closer to the actual heating oil season the price of that rises irrespective of crude prices.
I'm tempted to try and get them to lock prices in now but may be right or wrong. Its a difficult thing to "game"
You can certainly hedge it yourself with many different kinds of derivatives. I don't bother. I just lock it in.
For all you others out there that have not had this offered to you, call your supplier and ask why not.
Posted by: daveinbedstuy at August 22, 2008 4:53 PM
what company do you use?
Posted by: brooklynjennie at August 22, 2008 5:04 PM
We use statewide. And I like them. Whenever we have a problem they are here in a jiffy, sending competent pros. You call and you get someone friendly and willing and able to discuss whatever you called about.
That said, I'd jump in a second if I could get a substantial savings. When we bought this place 5 years ago we were paying 1.19 a gallon.
If I recall correctly they did not offer a lock last year because they got killed on it the year before...
Posted by: phripley at August 22, 2008 11:04 PM
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