Get the Best Price for Heating Oil This Winter

by Patricia Schaefer

When Old Man Winter comes along with his snow, ice, and cold blustery winds this year, will you have the satisfaction of knowing you're paying the best possible price for your heating oil?

Although you cannot control certain outside forces that affect the overall price of oil -- like the global supply and demand for crude oil or the effect of natural disasters -- there is much you can personally do to pay a lower price for your heating oil this winter.

If your price is already "locked in"
Locked in prices have become increasingly popular with consumers. Typically, a particular price per gallon is either fixed or capped for one year. A fixed rate doesn't go up or down. A price cap sets the highest price you will pay, but if retail prices go down, you pay the lower prices. Due to the volatility of the oil market, there are fewer providers now willing to offer these programs.

When your price is fixed, you need to know what to do down the road if current market prices for heating oil go considerably up or down -- and you need to know the date your fixed rate is set to expire.

If your present fixed rate is significantly higher than current market prices, you're in somewhat of a financial pickle. There are only a minority of heating oil companies that may release you from your agreed-upon price, and allow you to pay a lower price closer to current market rates. So, first call your heating oil company to see what they can do for you.

However, the majority of oil companies will hold you to your agreement. Be aware that if your company won't change the agreement, and you do cancel your contract, hefty penalties may follow. You may be contractually required to pay anywhere from about $200 to $500 in penalty fees, or you may, for example, have to pay for any service or repair performed during the current contract term. Weigh carefully the money you'll have to pay for canceling your contract versus the money you may save by going elsewhere for a cheaper price.

If your present fixed rate is considerably lower than current market prices, you'll want to take advantage of your fixed lower price to its full potential. Don't be like the woman who was furious when her oil company scheduled a delivery two days after her fixed price terminated. Had she been aware of the expiration date, she could have scheduled the delivery just a few days sooner at the lower price and saved over a hundred dollars on her bills.

Full-Service versus C.O.D. and "Hybrid" oil companies
Full-service oil companies offer automatic delivery, service contracts, budget plans, 24-hour emergency service, and -- less often today -- lock-in programs. A service contract pays for an annual system maintenance visit and for most repair parts and costs. This annual cleaning and tuning helps optimize performance and longevity of oil heating systems and can lower an annual heating bill up to 10 percent.

Many full-service providers also offer discounts for loyal customers, seniors, and large deliveries. Payments made in cash or within a dealer-set "prompt" time frame are often discounted as well. Customers are expected to make regular payments within 30 days.

C.O.D. discount dealers offer heavily discounted prices, but payments must be made in cash or credit card on the day of delivery. The bottom line is that you are paying for the heating oil and nothing else; i.e., no service contract, no yearly maintenance, no budget plans, and no fixed rates. If your furnace breaks down, you'll be paying those repair costs in full. You'll also need to keep track of your oil tank levels; discount dealers typically do not offer automatic delivery.

There are also a number of "hybrid" dealers. These companies combine features of both full-service and C.O.D. companies. Fuel oil prices are discounted -- but generally not as much as C.O.D. dealers -- and service contracts are offered. Payment in cash or credit is due on delivery, or within five to 10 days.

Full-service dealers generally charge the highest overall prices, but many offer free or discounted one-year contracts. These arrangement can save money in the long-term; i.e., the included annual maintenance and tuning of heating systems save energy and money, and most furnace repair and parts are provided free of cost to the contracted customer. C.O.D. companies offer the lowest prices per gallon, and hybrid companies are generally somewhere in between.

Oil Buying Groups
Consider joining an oil buying group in your area. These oil buying cooperatives use the collective buying power of members to negotiate considerable discounts on heating oil, service and heating equipment.

One such group is HEAT USA, the self-proclaimed largest heating oil buying group in the nation. HEAT operates in parts of ten states, and currently has a membership of about 40,000. Membership is $25 a year and provides discounted prices (typically about 20 cents per gallon below average retail prices), a free full-service contract, and an equipment shopping service. HEAT also monitors its dealers' performance to ensure customers receive reliable and quality service.

HEAT USA Executive Director Tim Irving says contracts can be cancelled at anytime without penalty, and the membership fee can actually be refunded to any dissatisfied member.

Heating Assistance Programs
There are local, state and federal government heating assistance programs available for homeowners who meet certain criteria; i.e., low income, the elderly or disabled. To find out if you're eligible, go to www.govbenefits.gov. This is a great site that acts as a single source for locating assistance programs at all levels of government. You can get results by completing a questionnaire, browsing by category or locating benefits by state.

Heating assistance programs in all 50 states include the Low Income Energy Assistance Program (LIHEAP) and the Weatherization Assistance Program. LIHEAP provides assistance in paying energy bills, and the Weatherization program provides for the installation of energy efficiency improvements that reduce energy costs.

Do Your Homework
Read these words and commit them to memory: Each and every year you -- the homeowner - need to spend an hour or two calling at least a half-dozen local oil companies; a dozen would be best. By shopping around for the best price and service, it should easily save you hundreds of dollars on your heating bills this winter. If you have a current contract, time your calls for a few weeks before it expires.

Questions should include:

• What is your price per gallon for your regular rate; and if available, what is your price per gallon for your capped and fixed rates?
• Is the service contract included in the price, and if not, how much is it? What does it include?
• How long is the contract term, and when does it start and end? (Some companies end all contracts on a particular date; i.e., every June 1, no matter when you sign on.)
• What is the company policy if you choose to go with another home heating oil provider before your contract term has ended? What, if any, penalties will you pay?

Geography, peace of mind, and the age and condition of your furnace should also play an integral part in your decision making. For example, someone with a 15-year-old furnace living in the frigid Northeast might want the security of a full-service oil company with 24-hour emergency service and a contract that will protect against unexpected repair costs. In contrast, an individual living in South Carolina with a brand new burner might be better served by paying for fuel C.O.D. and simply paying to have a yearly tune-up.

When you do choose a heating oil provider, make sure that the company and its technicians are fully certified, licensed and insured. You'll also want a reputable company. Check with your local consumer affairs office and Better Business Bureau (www.bbb.gov) for any past complaints. The Better Business Bureau site will provide you with the number and types of consumer complaints filed against the company; those filed within the last 12 months, and those within the last 36 months. It will also provide the status of those complaints as to whether or not they have been resolved to the satisfaction of the customer.

Remember... with a few hours of your time, you the homeowner and consumer can have the satisfaction of knowing you're paying the best possible price for your heating oil.

To learn how to further reduce heating costs, read Business Know-How's article Slash Heating Costs this Winter, where we list cost-free ways to lower heating bills as well as weatherization applications that lead to greater energy efficiency and savings. Follow this link to subscribe to the free Business Know-How Newsletter.

Copyright 2006, Attard Communications, Inc.

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