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Heat with oil? It might be time to lock in a good price

Posted by Cheryl Costa October 9, 2008 09:05 AM

If you heat your home with oil like I do, now might be the time to look into a rate lock plan with your oil provider. Oil prices fell yesterday to their lowest level this year. Demand is dwindling and supply is increasing.

Prices for home heating oil are now at or close to $3.00 per gallon if you belong to one of the mass buying agencies like MassEnergy. That is more than a dollar less per gallon than the price in May, June and July of this year.

It is important to note that this is the "daily" rate, meaning that this rate will fluctuate during the heating season. The price could be $3 now, but $4 or more in just a few weeks or months. If you want to lock in a fixed price for the winter, you will probably have to pay more than this rate, probably something like $3.30 to $3.45, but then your rate will be guaranteed for a fixed number of gallons. Of course, it is also possible that prices will continue to fall. You never know. However, I do remember thinking that the $2.59 price I locked in last winter was outrageously high and now I only wish I could find a rate that low. My plan is usually to lock in a fixed number of gallons that will get me through the winter and then float to the market rate for the deliveries that will occur in the late Spring.

Checkout this website to compare oil prices in our region and visit this website to learn more about the MassEnergy program.

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ABOUT MANAGING YOUR MONEY
Local finance professionals share insights and advice on issues such as budgeting, managing debt, and retirement planning.
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About the contributors

Jill Boynton is co-founder of Cornerstone Financial Planning in Newington, N.H. Along with traditional financial planning services, Boynton provides analysis specifically for divorce.
Andrew Chan is the founder of Integrative Financial Advisors in Framingham. He provides comprehensive financial planning advice and investment management services. He has been an adviser for over 12 years and works with clients to integrate all aspects of their finances including investments, retirement, education funding, and tax planning.
Cheryl Costa is a managing director at AFW Wealth Advisors, which has offices in Natick and Purchase, N.Y. She advises clients on investing, education funding, and estate planning. She holds a master’s in business administration from Boston University.
Jamie Downey has been an accountant for more than 14 years. He's a partner at Downey & Co. in Braintree. Prior to joining the firm, he served as a manager in the audit department of accounting firm KPMG.

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