Other LanguagesAmericans will pay more to heat their homes this winter, analysts predict, but buying your heating oil in advance may not save you much. Locking in a preseason rate for winter fuel comes with risks.
Average home heating bills are expected to jump 20 percent this year to $1,182, according to the Energy Information Administration. Approximately 8.1 million U.S. homes use oil as their main heating fuel. An estimated 90,000 Washington homes have oil furnaces, with the largest concentrations in King, Pierce and Thurston counties.
Many consumers prefer to fill their tanks during the late summer and fall when prices are typically lower.
"This year, the traditional lower summertime rate is not as low as it used to be," David Fox, a spokesman for the National Low Income Energy Consortium, told CNN Money.
That's true in the Puget Sound region, as well. Homeowners and renters here were paying twice as much for oil in July than they did last summer, according to a Seattle Times article. Moreover, prices have been unusually volatile, making it tough to decide when to buy.
Heating oil dealers sometimes offer prebuy options, which allow you to lock in a rate for fuel you’ll buy in winter. You make a single payment upfront, specifying the number of gallons you wish to buy. You’ll save if prices rise but are stuck paying the higher rate if they drop -- or you need to buy more. Some oil dealers offer “downside protection plans” that rebate the customer if the price falls, but those plans come at a steeper price.
Cap price plans, which set a maximum per-gallon price for the season, are less risky than prebuy deals but tend to cost more.
Problems can still occur if the company can’t fill all its orders. More than 3,000 customers who bought heating oil in advance were left in the cold when the now-defunct F&S Oil Co. of Connecticut couldn’t deliver.
Converting from oil to a new source of energy to save money may make sense, experts told the Seattle Times, but be prepared to wait years before you see any savings.