July 29, 2016
Total Protection Program is a Win Win
It is that time of year to start thinking about oil purchase plans for the upcoming winter season. Over the past few years our “Total Protection Program” also known as our cap program, has been very popular and has continued to help our customers to save on their heating expenses. Because you are protected in both rising and falling markets this program you truly can have your cake and eat it, too.
Even though the “Total Protection Program” has been very successful, it still causes some confusion with some people. The most common feedback we received was “Why is there a fee?” or “I don’t want to pay a fee to fix my price”. Continue reading to see how the cap price protection works and why there is a fee.
In order for Haly Oil to offer our customers price protection we have to first agree to buy those gallons from our suppliers at a fixed price. That is our cost of oil regardless of what happens to the price of oil after that because we agreed on a firm price. Similar if you were to purchase a stock from a stock broker. Once you buy the stock that is your cost regardless of what happens in the future to the price of that stock. After buying a stock that goes down in price I would love to call up a broker and say “I don’t want these stocks I bought at those higher prices last year, I want to own them now at the lower price now.” I will spare you the time, this doesn’t work, I tried.
So, anyway, after we agree on a fixed price we say to our supplier that “we want the option of buying oil at the lower price if it goes down.” Our supplier then says to us “ that’s fine but it will cost an upfront option fee.” Therefore, in order for us to be able to protect you in both a declining and rising market, we charge a fee to cover the cost of this option that we purchased from our supplier. You are not paying to fix a price, you are paying for the ability to cap your price if the market goes up, and to have a lower price if the market goes down.
At the end of the day, the “Total Protection Program” is a win-win. For a small fee you have peace of mind in what has become a very volatile market. Just when we think prices are finally stabilizing there can be a significant swing up or down. Thankfully, with the Total Protection Program you will be covered either way.