Is Pre-Buying Your Home Heating Oil Worth It?

Week 1 - Fuel Oil Tank Gauge

Week 1 - Fuel Oil Tank Gauge (Photo credit: KimCarpenter NJ)

One way to pay for your home heating oil supplier is by the pre-buying or prepaid method. What this means is that you pay upfront, the full amount of you home heating oil consumption for the winter months. Now why exactly would you want to pay for your home heating oil upfront and in advance? Well the main driving reason is because you are guaranteed of buying your home heating oil for the same price the whole winter season or the whole year if you wish to buy for a whole year.

This translates to savings if you are sure or if you think that the prices of home heating oil will be increasing in the coming months. Basically, when you sign a contract for pre-buying you home heating oil, you are guaranteed of a lock in price in which you will pay for your oil. Normally, the current competitive price of the home heating oil for the day that you sign the contract will be followed. When you have finally signed your pre-buying contract from your supplier, you can rest assure that for the next couple of months, you need not worry about paying for you home heating oil bill. For most people, the peace of mind of never having to worry about this utility bill makes the pre-buying plan the perfect plan for them.

However, there are also some risks involved in pre-buying your home heating oil. The most common risk is the fact that you trust your supplier fully that they will in fact deliver your home heating oil on time during the winter season. There have been some reported cases of home heating oil suppliers filing for bankruptcy a few days before the winter season starts. So what happened to all those people who paid in advance? Well they got nothing of course since the company filed for bankruptcy. Not only were they pushed to buy the more expensive home heating oil since it was already the prime buying season, but they also lost a big chunk of their money; money that they paid the home heating oil supplier that filed for bankruptcy.

Another risk is that there have been times in the past where the price of home heating oil NI has decreased significantly a few months before the winter season. However, since you have already signed for a prepaid contract, you are locked-in at a particular price. No matter what the situation is, even if the prices will be cut to half, you will still pay for the agreed amount based on your contract.

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