What's happening with Fuel prices?
It is no secret fuel prices have been on the increase over the past year.
When fuel prices increase it is hard on everyone; our customers have higher bills, our credit and dispatch efforts become more challenging, our cash flow gets squeezed because we extend credit, and have higher delivery costs. Customers sometimes assume that when oil costs more, we make more money, but that is not how pricing works. In fact, when the underlying price for fuel goes up, the percentage we add for our gross profit goes down.
Since mid-2015 we have been in a rising price environment with prices on petroleum products doubling during that time. Looking at a long-term chart of New York Harbor Fuel Oil prices, one can see how prices got very high in 2008. Fortunately, we are still well below that level today, with oil trading at $65 we are well below the high of over $140 a barrel.
What will oil prices do next? While one cannot predict with certainty, the consensus seems to be that prices will stay about where they are now - with the potential for significant volatility on a day to day basis. Global political tensions, including uncertainty about trade and China, Middle East tensions, along with Russia's growing power, all contribute to the potential for price volatility.
Since we cannot control the price of oil, we offer the next best thing, a Ceiling Price Program. Customers on our Ceiling Price Program level out their fuel costs in 2 important ways:
- The Ceiling Price quoted will be the MOST you have to pay per gallon for fuel in the coming year. If fuel prices drop well below the ceiling price - not to worry. Your delivered price will go down too. It's a win-win.
- Program customers are required to go on a budget plan or pre-pay. Spread your payments evenly across many months and get control of fuel costs, or pre-pay for more discounts. Either way, you now can plan how much you need to spend on fuel each month. If the season is terribly cold or warm, we will work with you to adjust your payments to avoid any surprises.
Our Ceiling Price Program is a form of insurance against price spikes and volatility in the oil markets. We are not happy that prices have increased and while we can't control the future, we can offer this one tool to help our customers plan for their fuel bills in the year ahead, and if need be - avoid worst-case pricing scenarios.
If you are interested in becoming a Price Program customer, call our office today!