Homeowners Who Played The Odds On Oil Heating Costs Lose Out

Originally published on January 25, 2016 2:26 pm

Overall, natural gas is by far the most popular source of home heating in the U.S. But in the Northeast, homeowners are much more likely than in other regions to use heating oil.

Many homeowners are smiling this winter, because fuel prices are down 50 percent from two years ago.

But not everyone is happy. Buying heating oil is a little like playing poker: Bet on the wrong price and it'll cost you.

Barb Corliss handles customer service at Keyser Energy in Proctor, Vt. The company provides heating fuel to about 5,000 customers, and Corliss says it's been a crazy ride.

"Four-dollar-a-gallon oil down to $1.799 today," Corliss says. "It's been a ride for not only the staff, the drivers, but the customers as well."

While many customers pay as they go, others prefer to lock in a price for the entire year. Still others pay a bit more per gallon for a sliding scale that caps how high prices go while allowing for price drops.

"It's speculation," says Corliss. "People are innate gamblers by nature."

But after watching all the news about volatile oil prices, many of those gamblers are tired of the pricing game.

On a recent subzero morning, a Keyser fuel truck backs into Jackie Fetterolf's driveway.

Fetterolf is one of many who bet wrong on heating oil and locked in a price last June when it was 23 percent more.

"It's very frustrating because you plan it, and years past it's always gone up, and now it doesn't, and now you go, 'Is this really worth doing?' " Fetterolf says.

The Pluses And Minuses Of Locking In

While fixed contracts can be great when oil prices are climbing, Matt Cota of the Vermont Fuel Dealers Association says unless you bought sliding scale insurance, there are no rebates when fuel drops.

Whenever a customer buys a fixed-price or pre-buy contract from a heating oil dealer, the dealer has seven days to buy that fuel from its wholesale supplier, Cota explains.

So if a customer buys a fuel contract for $700 in July, the dealer has one week to buy $700 worth of fuel.

With oil prices at 10-year lows, the popularity of fixed-price contracts has declined.

At Keyser Energy, nearly half of customers had been using them; now, it's about one-quarter.

Rob Oberg, a driver and deliveryman for Keyser, says he's not hearing many complaints from customers — even those with fixed contracts — because prices are so low.

"Most of the people I run into are actually rather happy," he says.

A few blocks away, Rhoda Grace says even though she locked in a price last summer, she's taking it in stride.

"I feel safe anyways. If the price happens to skyrocket, I'm covered," Grace says.

Experts don't expect fuel prices to climb this winter. But come summer, all bets are off, and fuel buyers will have to decide if they feel lucky when it's time to heat their homes.

Copyright 2020 Vermont Public Radio. To see more, visit Vermont Public Radio.

STEVE INSKEEP, HOST:

The low price of oil has affected many parts of the economy, not least the market for home-heating oil. Northeastern homeowners burn a lot of it during the winter, and they're paying prices that are about one-third of what they were paying in 2011. Still, not everybody's happy. Getting a heating-oil contract is a little bit like playing poker. Bet on the wrong price, and it will cost you. Vermont Public Radio's Nina Keck reports.

NINA KECK, BYLINE: At Keyser Energy in Proctor, Vt., Barb Corliss handles customer service. The company provides heating fuel to about 5,000 customers, and Corliss says it's been a crazy ride.

BARB CORLISS: Four-dollar-a-gallon oil down to $1.799 today. It's been a ride for not only the staff, the drivers, but the customers as well.

KECK: While many customers pay as they go, others prefer to lock in a price for the entire year. Still others pay a bit more per gallon for a sliding scale that caps how high prices go while allowing for price drops.

CORLISS: It's speculation. People are innate gamblers by nature.

KECK: But after watching all the news about volatile oil prices, many of those gamblers are tired of the pricing game. On a recent subzero morning, a Keyser fuel truck backed into Jackie Fetterolf's driveway. Fetterolf is one of many who bet wrong on heating oil and locked in a price last June when it was 23 percent more.

JACKIE FETTEROLF: It's very frustrating because it's like you plan it and, you know, years past it's always gone up. And now it doesn't, and now you kind of go, is this really worth doing?

KECK: While fixed contracts can be great when oil prices are climbing, Matt Cota of the Vermont Fuel Dealers Association says unless you bought sliding scale insurance, there are no rebates when fuel drops.

MATT COTA: Any time a heating fuel dealer offers their customer a fixed price or a pre-buy contract, that they have to, within 7 days, go secure that fuel from their wholesale supplier.

KECK: In other words, if a customer buys a fuel contract for $700 in July, that dealer has a week go out and buy $700 worth of fuel. With oil prices at 10 year lows, the popularity of fixed-price contracts has declined. At Keyser Energy, nearly half of customers had been using them. Now it's about a quarter. Keyser Energy's Rob Oberg makes another delivery and says even for people with fixed contracts, he's not hearing many complains because prices are so low.

ROB OBERG: Most of the people I run into are actually rather happy, so, you know, we're actually kind of lucking out pretty good right now.

KECK: A few blocks away, Rhoda Grace says, even though she locked in a price last summer, she's taking it in stride.

RHODA GRACE: You know, I feel safe anyways. If the price happens to sky-rocket, I'm covered.

KECK: Experts don't expect fuel prices to climb this winter, but come summer, all bets are off. And fuel buyers of the Northeast will have to decide if they feel lucky when it comes time to heat their homes.

For NPR News, I'm Nina Keck in Chittenden, Vt.

INSKEEP: Now I've got a Clint Eastwood line bouncing around in my head - you feel lucky? Transcript provided by NPR, Copyright NPR.