We have been surprised and delighted by the recent decline in world oil prices. Oil has been falling steadily since the middle of June, and our price to customers has fallen too: Today our oil price is more than $1.00/Gallon LESS than it was 12 months ago! That translates into tremendous savings – hundreds of dollars for every family – and we couldn’t be more thrilled about it.
Fixed Price customers, on the other hand, are on the wrong side of the glass, paying close to $4/gallon while their neighbors ride the market down. Fixed Pricing has always been a high risk, high reward gamble, but in recent years people have been lulled into thinking that oil will always rise in the winter, so they haven’t taken the “risk” side of it seriously.
Even some of our own customers were tempted by other companies’ fixed prices and insisted that we match them. The problem is that companies were required by law to purchase oil to cover those contracts, making it impossible to renegotiate a customer’s fixed price even though we would love to do so.
Fortunately, our Dynamic Price Caps have functioned exactly the way we promised, allowing customers to pay lower and lower prices as the market falls: Our Price Cap customers are paying the same low prices as everyone else in this falling market. But if the market were to turn, a Price Cap will also protect them against a rise. That’s why Dynamic Price Caps are the only price protection we offered this year, and why we so strongly discouraged fixed pricing.
We don’t know when oil’s downhill sleigh ride will end, but we’re certainly enjoying the savings while it lasts! Meanwhile, we are working hard making our deliveries on time, maintaining our customers’ heating equipment, and talking about energy savings (our favorite subject!).
Happy Holidays! – Peter Aziz