Purchasing a building’s heating oil is one of the most important decisions a board has to make. And in this era of ever-rising fuel costs, it’s also one of the most frustrating. When deciding how to pay for their buildings’ heating oil, boards need to determine which method works best for them.
A Tale of Two Options
There are two basic options a building can choose from when deciding how to be billed for oil: fixed rates and floating rates. A fixed rate means the building will buy its oil at specified price that will not change over the course of the year. Buildings that choose this method may have to commit to buying a certain amount of oil over the course of the year, and will pay for oil whenever a delivery is made.
Floating rates mean that the price paid for oil will be based on the market rate at the time the oil is purchased and delivered. That means the price paid can go up or down with every delivery. Some companies also offer what is called a price cap, which designates a maximum price per gallon that homes or buildings will pay, regardless of how much heating oil might rise.
“They can get a delivery on August 2, and if they get another delivery on August 19, they can be paying a different price,” says Rodger Loughlin, an owner of Ferrantino Fuel in Park Slope, Brooklyn. “It can go up, and sometimes it can go down.”
A Little Bit of Both
David Sokol is the vice president of Plymouth Rock Fuel in Brooklyn, a company that offers both fixed and floating prices. According to him, there is more than just one way to negotiate a fixed-price fuel bill.