Quote:
Originally Posted by chipj29
With the volatility of oil prices right now, I am not sure I would lock in right now unless I could get a guarantee that if prices drop then my pre-buy price would as well.
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Oil companies call this the "Cap" option. You buy the Cap, and you're protected on both sides.
Here's how it works. You sign up for the pre-buy. Current price (as of last week) is $2.45/gal. This protects you from price increases next year.
You also pay $0.30/gal to protect you from the downside. That means if oil goes below $2.45/gal, you pay the lower price on fill-up.
The payment plan is monthly (pre-buy is paid all at once at the beginning of the year). Some oil companies (like Stafford Oil) will also give you a $0.10/gal refund at the end of the year -- so your Cap cost is really only $0.20/gal.
I did this last year when oil was $4.50/gal at the time of the contract, and saved a bundle.