Why You Need Price Protection

If you are currently using a "Pay by Delivery" method for buying your fuel, then you are putting yourself at extreme risk to market volatility.

What does this mean? Volatile or market volatility means "liable to change rapidly and unpredictably, especially for the worse."

This means that it is nearly impossible to predict what your prices and fuel costs will be for the upcoming season, because prices can change drastically at any given time. There are ways to avoid market volatility though by enrolling in a Price Protection Plan.

What is Price Protection?

Price protection allows you to have more control over your fuel price. You can protect your price in two different ways:

Fixed Price: A fixed price locks you into one price per gallon for the entire program year. Your fixed price never fluctuates, even when the market price does. You’ll know exactly what your price per gallon will be, regardless of market conditions.

Capped Price: A capped price is also referred to as a "max" price or "ceiling price". With a capped price plan, if the market price of oil goes above your capped price then you won’t have to pay the higher price. This plan also gives you the ability to receive a lower price if market prices go below your capped price. This is referred to as downside protection.

What Affects Oil Price?

There are many things that affect heating oil prices- most of which are derived from supply and demand issues.  Anything from weather, political events, natural disasters, and many more can influence the price of oil. This chart below from The Energy Information Administration shows a direct correlation between 14 major geopolitical and economic events that affected the price of crude oil.

Why is this important for you to know? Heating oil prices are always at a risk, and can change drastically based on unforeseen circumstances. While we certainly cannot control any of these major events that influence prices, we can put safety measures in place and have protection on pricing and structure to payment.

Updated: Quarterly | Last Updated: 03/31/2023
1: US spare capacity exhausted
2: Arab Oil Embargo
3: Iranian Revolution
4: Iran-Iraq War
5: Saudis abandon swing producer role
6: Iraq invades Kuwait
7: Asian financial crisis
8: OPEC cuts production targets 1.7 mmbpd
9: 9-11 attacks
10: Low spare capacity
11: Global financial collapse
12: OPEC cuts production targets 4.2 mmbpd
13: OPEC production quota unchanged
14: Global pandemic reduces oil demand

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Copyright US EIA https://www.eia.gov/finance/markets/crudeoil/spot_prices.php