Problem with oil company

[ylomnstr]

So in the summer during the surging oil prices, I got scared and locked in an oil delivery price of $4.99 per gallon. My oil company is Love Effron. Now the prices have dropped significantly, and Effron says I can't lower the price. So basically they are robbing me. I thought the whole point of locking in was that it wouldn't go higher, but if it dropped, I would get the lower price. Do I have any choices here short of paying a termination fee and telling them to go scratch? Just wondering what you guys think.

 

[MrEd]

See if you can buy it from someone else and then get a refund from Effron at the end of the season for the "unused" gallons...read the fine print carefully to see if this is possible.

 

[ylomnstr]

Well I'm not on a payment plan with them. Just auto delivery and then they bill me. The payment plan didn't make sense for me since they wanted to base it on last year's usage which was before I got my pellet stove this summer. So I'm assuming my usage will be much lower this year due to the pellet stove. Perhaps next year the payment plan would work.

 

[deerefanatic]

So get someone cheap to come fill your tank right away... Using your pellet stove, you won't burn very much oil. Then, when they come to fill, your tank will be almost full..... They cant sell you fuel that won't fit in your tank!!

 

[ylomnstr]

So get someone cheap to come fill your tank right away... Using your pellet stove, you won't burn very much oil. Then, when they come to fill, your tank will be almost full..... They cant sell you fuel that won't fit in your tank!!

That's going to be my plan. I'm on hold with them now to see if they'll give me any other options. My first scheduled delivery for oil is in November so I have some time.

 

[RJP Electric]

That is crazy! Most people who get locked have pre paid a substantial amount up front. We call that a cash customer up here, I pay what the price is for the day, I could be on auto delivery but I call when I am getting low and they invoice me, if I pay within 15 days I get 10 cents off a gallon. It gives me a choice to call other companies too for the best price. Give the Attorney Generals office a call...Sounds fishy to me.

 

[stee6043]

I don't buy oil but I do buy steel. This type of arrangement is very common in "general industry". You have to ask yourself this question - if you had locked in at $4.99 and today's price was $6.50 how would you feel if the oil company came back and asked you to pay $6.50? There is risk in locking pricing for both sides. If you lock in at $4.99 and the oil company sends you oil that cost $6.50 they loose. So they accept that risk (and try to mitigate it as best they can). If it goes the other way, you accept the risk that the price could go down.

I'm certainly not trying to justify this for you but it is a common situation on other commodities. There is always risk when locking in that prices will drop and you'll be paying higher than market values. That's the game we play...and it is fair to both parties when you look at the long term. You should ultimately save as much as you loose in a typical market.

 

[ylomnstr]

I don't buy oil but I do buy steel. This type of arrangement is very common in "general industry". You have to ask yourself this question - if you had locked in at $4.99 and today's price was $6.50 how would you feel if the oil company came back and asked you to pay $6.50? There is risk in locking in for both sides. If you lock in at $4.99 and the oil company sends you oil that cost $6.50 they loose. So they accept that risk. If it goes the other way, you accept the risk that the price could go down.

I'm certainly not trying to justify this for you but it is a common situation on other commodities. There is always risk when locking in that prices will drop and you'll be paying higher than market values. That's the game we play...and it is fair to both parties...

I understand the risk, but with oil at approx $3.60 per gallon right now, what are they doing with the $1.39 per gallon difference? That's quite the profit margin. I know if it was the other way around i'd be pretty happy right now, but it's hard to swallow, especially when we're living paycheck to paycheck.

 

[stee6043]

I'll tell you exactly what they're doing with your $1.39 - they are applying it to the countless contracts they signed earlier this year/late last year before oil spiked. I'd be willing to bet they lost a lot more than $1.39 a gallon on a fair number of contracts.

It sucks, this I know. But customers, users, consumers all want fixed pricing, no escalation clauses, guarantees, etc etc. These things induce risk. To manage this risk you have to have agreements in place that are ultimately fair to all parties. That doesn't make it feel good! But it works...unless you're a steel company and can decide not to honor agreements from time to time....

 

[ManiacPD]

You should have read the fine print. "Lock-In" prices up here have always worked that way. Conversely, I never sent the oil company a check at the end of the year when it was $0.50/gallon more at the end of the season vs. my lock-in price. You signed a contract and you'll spend more on a good lawyer who may or may not be able to get you out of it. The lesson is learned and move on.

 

[steam man]

I locked in at about $5.00/gal. However, they way my oil supplier does it is that they buy insurance on a per gallon basis. The price was 25 cents/gal and my oil company and I split the cost. If the price falls, I get the lower price but I don't get my insurance back. I had to pay up front but I made sure what I was getting into before I paid.

Mike

 

[egghead2004]

I think it was 4 or 5 years ago, I locked in at $1.59 with the auto delivery, sounds like a steal now, huh.
Anyway, when the oil price went up to $2.05, they backed out of the contract! They decide to charge me $.05 less than the current rate. Well, this particular company who I have paid cash to for years getting the discount, charges $.15 more for the auto delivery which I did not know. so after they backed out, they ended up charging $.10 more than the cash price! What a deal eh? Needless to say I called them and cancelled my accout totaly. They threatend with a lawsuit, so I left the account open and agreed to keep the contract to the end of the term. However, I ordered 100 gallon deliveries at the 1/2 tank level from someone else until the contract ran out. They did show up 2 times to fill the tank, 20 gallons one time, 15 gallons the next time. I did get a call from them, I just told them I piped up a wood boiler and rarely use the oil anymore. I never heard from them again.

 

[Mack The Knife]

How are they going to force you to buy oil??
Save your money.... let them make their money somewhere else.

 

[Wood Pirate]

Dont feel bad. I panicked at the end of the summer and had my oil company fill my tank at +-4.60 / gallon thinking it was going to continue going up.

Of course just my luck it starts to go down right after. So basically I pissed away $200 bucks by panicking.

However, I believe most oil companies around here usually will give you the lower rate, but I am not sure about this year. They all took a good hard look at their contracts before sending them out this year.

 

[davenorthshorema]

I have an uncle that works at a heating oil company (he's high up on the ladder) and I found out he is stocking up on firewood. I thought that was interesting....