When you arrange for heating oil delivery, you might think getting a contract that locks in lower prices for the long term is a wise move. Yet a lot of heating oil companies don't set up contracts where you lock in prices, preferring to keep agreements short-term and variable. There are advantages to both approaches, but the one you use depends on how you feel about a few facts in the heating oil business.
You Don't Know How Low Prices Will Go
One is that you don't know how low heating oil prices will go. This is the reasoning behind many companies not using locked-in contract prices; if the oil prices drop, then they can pass those savings on to the customers. And that's valid reasoning because you don't want to lock in a rate that will suddenly turn out to be the highest rate in months, because the rate suddenly dropped right after you signed your contract. If heating oil prices don't look like they're going to spike anytime soon, a variable contract that allows you to take advantage of lower prices in the future is better.
You Don't Know How High They'll Go, Either
Of course, you really can't predict how high prices can go, or if they'll suddenly rise. 2020 has been full of surprises that, as the meme goes, were not on anyone's bingo card for the year. If you're worried that currently low prices could suddenly shoot up, looking for a company that offers long-term contracts that lock in low rates could be better for you. You may want to start off with variable rates and see how the heating oil landscape looks and what predictions for the next few months will be.
You Can Always Switch Suppliers if You Have No Long-Term Contract
One more advantage to using the variable no-contract pricing is that it is much easier to switch heating oil companies if you find one that offers better prices. If you have a long-term contract, you'll either have to wait until the contract ends, or pay a cancellation fee that could be pretty hefty. If you're new to heating oil, having as much freedom as possible to switch companies is essential.
As you use heating oil more and more, be it for industrial or residential purposes, you'll become more familiar with seasonal differences in pricing (early fall pricing might not be as high as deep-in-the-heart-of-winter pricing, for example) and other variations. After a while, you'll figure out which contracts and pricing schemes are best for you.
For more help with heating, contact a local company, like Cash Oil.