Read News
|
Pocono News Section
Prepaid Heating Oil Contracts Not Paying Off
Prepaid Heating Oil Contracts Not Paying Off - Monday, November 24, 2008 at 6:27PM EST
Reported by: Jeff Chirico
Monday, Nov 24, 2008 @ 06:27pm EST
DUSHORE, SULLIVAN COUNTY --The falling fuel prices are making most of us smile --but not those who prepaid for their home heating oil. Many folks signed contracts this summer that locked in the price when it was sky high. Consumer reporter Jeff Chirico is here with more on this.
We know the price of a barrel of oil has dropped by more than half since its high at 147 dollars in July. Now those who locked in at that price are paying thousands more than the rest of us and there's not much they can do about it. John Mullen of Dushore expected heating oil prices to climb to 200 dollars a barrel this winter. “I think I signed oil was 140 a barrel so I figured it's going to keep going." He paid five grand for one thousand gallons at $4.99 a gallon. But now heating oil's selling for half that –$2.50 a gallon and he can't get a refund. "It didn't seem fair but I did sign a contract so I guess I learned a lesson."
Prepaid contracts are a gamble. They allow customers to buy the oil for the same amount over the winter. If prices keep climbing, the homeowner made a good bet. If they drop, there's nothing they can do about it.
"The company's locked in at that rate and people have to pay that." Bob Dittmar of Dittmar's Oil in Muncy says heating oil companies also sign fixed-price contracts with their suppliers before winter. "As soon as you lock that in you have to pay that price regardless of what happens in the current market." Oil companies can't offer refunds or they'll go under.
This is the first year Dittmar's didn't offer prepaid contracts. They say thought the price was as high as it was going to go." "The last couple years oil has been down in winter and higher in summertime." His company's bet paid off. John's Mullen's did not --and now he says he's out about twenty five hundred dollars...money he would have rather put towards his kid's college fund.
But Dittmar says with the volatile nature of the fuel prices --customers who locked in may end up ahead by the end of the winter --if prices start climbing back up.
| |
|
|
|