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Market Price, Prebuy and Price Cap Explained

home fuel payment west virginiaRoach Energy offers several ways to buy your propane or heating oil– but deciding which option to choose can be confusing, because each one has its advantages.

As with any big buying decision, it pays to be informed, so we’ve prepared a short summary of each option to help you decide what’s best for you.

Market Price

Just like stocks on the stock market, the cost of fuel changes from day to day with no limit about how high or low it can go; this is called the market price. If you buy your fuel at market price, you can take advantage of falling prices without having to pay a fee – but if they go up, you’ll have to pay the higher price. 

Pre-Buy

Purchasing propane in advance of heating season at a fixed rate locks in a price on all the gallons you pay for, regardless of when they’re delivered and no matter what happens in the market. This Pre-buy option protects you from rising prices, but it also prevents you from realizing a discount if the market price drops.

Price Cap

A Price Cap program limits how much the price of propane can rise, but not how far it can fall. Propane suppliers charge a fee for Price Cap service because it requires us to buy insurance from our own suppliers in case the market price drops; the fee you’re charged covers the cost of that insurance.

Summing Up

As you can see, each price option has its benefits and risks, which makes choosing an option a matter of personal choice. To summarize:

Still have questions about what pricing option is best for you? Contact the pros at Roach Energy to learn more about propane and heating oil delivery in West Virginia and western Maryland.