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Many readers ask Heating Oil News: what's the difference between the cap price, fixed price or market price and how can I save money this heating season?  Most heating oil customers are unaware of different ways of purchasing fuel that sometimes are not presented to them by their current heating oil providers.

CAP PRICE:  This provides the customer with a ceiling which means the price could not exceed the cap. However, if the price drops, the customer automatically takes advantage of the lower price.  EXAMPLE: Your cap price is $2.00 per gallon and the market price rises to $2.15 per gallon;  your price stays the same at $2.00 per gallon.  If the market price drops to $1.90 per gallon, you receive the lower price of a $1.90 per gallon.

FIXED PRICE:  This is a predetermined price that you receive which gives you the same price throughout the heating season whether the price goes up or down. EXAMPLE: if your fixed price is $2.00 per gallon and prices go up $2.50 per gallon; your price stays at $2.00.  If the price drops to a $1.50 per gallon,  your price still stays at $2.00.

MARKET PRICE:  This is a certain index the company follows as an indicator  which gives the customer the ability to float with the market.  As prices rise, your price will rise; as prices fall, your price will fall. 

Pre-Buy Plan.  When a customer pays for oil up front for the entire year, before receiving the product.  We are not saying this is good or bad.  However, buyer beware if the company should go out of business or bankrupt your money will be at stake.

Many readers ask: what's the best way to purchase heating oil?  There is no simple answer to this question, tolerance level plays a big factor in what you're most comfortable with. Analysts and market gurus love to predict what will happen in the commodities market in the up and coming weeks or months. Unfortunately, they are only right 50% of the time.  This doesn't sit well with many heating oil consumers that need accurate and unbiased information to make an educated decision.

Our news organization keeps in touch with many Heating Oil, Propane and Natural Gas dealers along with other energy organizations to help educate consumers.  These energy providers write articles from time to time educating consumers what to watch out for when purchasing your next service.  Most of our article contributors have many years of experience and can be an extremely useful reading tool when making your next decision.


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