Fixed price propane for 2009-2010 heating season

Posted by DA on October 1, 2009, 11:20 am

Hi all,

My gas company just sent me a letter offering to sign up for a fixed price
(@ $1.949/gallon) of propane until April 30, 2010. I don't remember them
sending any such letter last year which got me thinking maybe they
anticipate a price drop? I realize that no one has a crystal ball (a
working one :-)) but what is the collective wisdom of this group saying -
is it a good idea to sign up for $1.949/gallon fixed propane (in PA)
until next spring?

Thanks!

-------------------------------------
\//.

Posted by Jim Elbrecht on October 1, 2009, 11:55 am

info_at_1-script_dot_com@foo.com (DA) wrote:

>My gas company just sent me a letter offering to sign up for a fixed price
>(@ $1.949/gallon) of propane until April 30, 2010. I don't remember them
>sending any such letter last year which got me thinking maybe they
>anticipate a price drop? I realize that no one has a crystal ball (a
>working one :-)) but what is the collective wisdom of this group saying -
>is it a good idea to sign up for $1.949/gallon fixed propane (in PA)
>until next spring?

My theory on all these 'fixed price' deals, both oil & propane, is
that the dealer probably knows more about the market than I do. He is
in business to make money.

My fuel oil company has offered me a deal for the past 5 years. I've
passed every year, but I check the numbers in the spring. They won
every time, save one. [especially last year]
The first 2 yrs have a $200 'contract fee' which includes a cleaning.
The other years were $100 'contract fee.

From this year back-
Contract        actual
2.59        2.39 [so far]
4.95         3.01
2.80        3.52
2.94        2.92
2.14        2.56

If I had put $100 up front, and contracted for 100 gallons more than I
use, I would have 'saved' 72cents per gallon in the 2007-8 season. I
used 318 gallons so I would have come out $120 ahead.

What this buys the dealer is customer loyalty. [I've stuck with the
same folks for 25yrs anyway because they are reliable.] In the
one year I would have saved, when they sent me the plan at the
beginning of the next year I might have bitten because I already had a
100 gallon credit-- and that was the year they were nearly $2 off.

In 2005 it looks like I saved a bit- but I only used 270 gallons that
year. $113 save- $100 fee- and for some bizarre reason they wanted me
to contract for 621 gallons that yr.. So I'd have been tying up an
extra $700 that I'm sure I saved $13 on somewhere.

How much propane will you use in a season? Can you buy a tank big
enough to hold it? Then shop in the summer and buy from whoever
gives you the best price.

Jim

Posted by DA on October 1, 2009, 12:24 pm

DA had written this in response to
http://www.thestuccocompany.com/maintenance/Re-Fixed-price-propane-for-2009-2010-heating-season-good-397636-.htm
:

Jim Elbrecht wrote:

> My theory on all these 'fixed price' deals, both oil & propane, is
> that the dealer probably knows more about the market than I do. He is
> in business to make money.

Well, that's pretty much my line of thinking, too. I've yet to see a
for-profit business that had betterment of the client as their primary
objective. Besides, my gas company does not need to buy my loyalty - they
already have me by my ... bills - they have exclusive rights in this
development and actually own the tank. There are no strings attached to
the fixed price offer (at least from what I can read in the letter) but,
like I said, in this case they probably don't even need any.

I did some research online about propane pricing but all the data seems
way off (based on last year's prices) - in $2.50+/gallon in which case the
offer would make no sense whatsoever to the gas company. So, they must
know something general public does not in order to come up with the offer.

My hopes are that someone in this group might follow heating costs trends
closer than my amateur self and can possible share their finds here.

-------------------------------------
\//.

Posted by on October 1, 2009, 10:10 pm

On Thu, 01 Oct 2009 16:24:30 +0000, in alt.home.repair,
info_at_1-script_dot_com@foo.com (DA) wrote:

>Well, that's pretty much my line of thinking, too. I've yet to see a
>for-profit business that had betterment of the client as their primary
>objective.

They have their own best interests at heart, but there are at least two ways
to do that...and one of them makes *both* of you happy....

> Besides, my gas company does not need to buy my loyalty - they
>already have me by my ... bills - they have exclusive rights in this
>development

Who signed away your right to do business with the vendor of your choice?
You got an HOA on your back?

--
Due to Usenet spam, emailed replies must pass an intelligence test: if
you want me to read your reply, be sure to include this line of text in
your email, but remove this line before sending, otherwise my filters
will delete your email with all due prejudice. Thanks!

Posted by Colbyt on October 1, 2009, 12:11 pm

> Hi all,
> My gas company just sent me a letter offering to sign up for a fixed price
> (@ $1.949/gallon) of propane until April 30, 2010. I don't remember them
> sending any such letter last year which got me thinking maybe they
> anticipate a price drop? I realize that no one has a crystal ball (a
> working one :-)) but what is the collective wisdom of this group saying -
> is it a good idea to sign up for $1.949/gallon fixed propane (in PA)
> until next spring?
> Thanks!

I more or less agree with Jim.

I know nothing about propane.

In May I got one of those offer for $9.00 per MCF of natural. Last March the
delivered price was 14.80 something. Current price at that time was about
10.80. Price has dropped even more since then.

Did a little research online and found out the bottom had fallen out of the
market and the well head price was about $4.50. There is about a 90 day
delay in price adjustments for stuff in the pipeline.

I ignored the offer. My current bill reflects a delivered price of 3.61 per
MCF. Gee! I could have been locked in at $9.00

Our budget amount went from $144 per month last year to $72 this year.

I suspect propane will follow the general market.

Colbyt

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Fixed price propane for 2009-2010 heating season - good idea?