Common Sense Information About Buying Heating Oil
Contact your local Independent Connecticut Petroleum Association oilheat dealer to learn more about types of programs he or she is offering this season. You may search a list of reputable dealers who ascribe to the ICPA Code of Ethics, and so have a higher interest in protecting consumers, in your area by following this link > http://www.icpa.org/find.htm

Here is what consumers need to be sure of in selecting a heating oil supplier;

  1. That you find your heating oil dealer at http://www.icpa.org/find.htm, or your bioheat dealer at http://www.icpa.org/find_bioheat.htm That is your greatest measure of protection that you are dealing with a company that complies with state laws, ascribes to the ICPA Code of Ethics, offers products and services that are fairly priced and through contracts that meet or exceed state standards.
  2. Here is the ICPA Code of Ethics 
  3. Be wary of a supplier offering prices or services substantially below the rest of the competitors in your market.  Recently, this has been a sign of desperation by a company trying to recoup cash through offering contract oil and then eventually the company ends up failing and not delivering fuel;
  4. Never buy from a company that is not registered with the Department of Consumer Protection. First, go here > http://www.dcpaccess.state.ct.us/DCPPublic/LicenseLookup.asp
  • From the CATEGORY menu select STANDARDS UNIT
  • From the next page, under CREDENTIAL TYPE, select HOD Home Heating Fuel Dealer
  • Now type in the name of the company and see if it is properly registered

There are several options of how you may buy heating oil, depending on what your dealer provides.

I. PRICES

Everyone wants the best value for their money  - regardless of what we buy.  Heating oil is no exception.  ICPA's heating oil members have signed a Code of Ethics that pledges their business operations to a higher level of consumer confidence, regulatory compliance and environmental protection.  The lowest price isn't always the best value.

II.  Fixed price contracts

 A contract to purchase a set amount of gallons of fuel for a fixed price during a specific period of time. The dealer usually requires payment up front. Buying a fixed price contract is nothing more than a guarantee of stability and certainty - it is never a guarantee of cost savings as no one can tell the consumer whether markets will go up, down or stay the same. This type of program is insurance against uncertainty - just as with your auto insurance or homeowners insurance - you may never use it but you know you are protected against the unforeseen. Just as with insurance, you don't get your money back simply because you didn't need it. When you sign buying contract oil, you own it. Failure to abide by the contract may result in your paying expensive cancellation fees and liquidated damages costs


 III. Budget Programs

 You can establish a monthly budgeted amount to pay for your heating costs that spreads equal payments out across 8 or 10 months. No more worries about the single large delivery cost, your heating bill is in equal monthly installments.


 IV. Downside Protection/CAP Price

 If the customer has chosen a CAP price and then during the winter, for various reasons the price drops, the contract price can also drop. This option carries a premium cost per gallon, much like an insurance premium, to protect the downside price. What this means is, if you want to pay no more than a specific amount and, at the same time, pay a lower price if the market declines - you can generally expect to pay a premium price for that protection as it costs your oil supplier more money to have that same protection from wholesale suppliers. Not all dealers offer this type of plan.


V. General Information

 The consumer must remember that contract prices are offered early in the season. All dealers do not offer fixed price or cap program contracts. The consumer must also consider that when you agree to buy from a dealer at a fixed price, the dealer has to go to the market with the wholesaler and buy the contracts to cover your purchase. Unless you have paid the premium for downside protection, the dealer cannot lower the price to you if the market price drops.

Consumers need to also understand that when they sign a contract they have bought the oil, as the dealer has bought the oil for the consumer to be delivered later.  Consumers cannot just walk away from a contract without the dealer exercising a strong liquidated damages clause in the contract reflecting that the consumer would need to buy his/her way out of a contract in the very same way as what happens if a consumer leaves a cell phone contract, a car lease or home mortgage before the term is complete.