Manage Higher Heating, Fuel Costs

Following Tips Can Add Up To Savings This Winter

(CBS) 

Managing Heating Costs

Shop around for heating fuel by calling three to six providers in your local area. When doing this recently in the greater Boston area, we were surprised to find that prices can vary by 10 percent and sometimes more.

Ask friends and neighbors who they have used that has been a reliable and reputable provider and check the local listings. Getting the best deal on heating fuel can save about $150 to $250 over the heating season.

The spike in heating costs can be a shock to the household budget, so consider managing heating cost spikes by choosing to buy your heating fuel under a "Fixed Price" contract, where you pay the same cost all year long no matter what happens to heating fuel prices. You can also look into a "Cap Price" contract, where you will not pay higher than a set capped cost for heating fuel during the entire year.

With either choice, there is no free lunch; if heating fuel prices fall, the company is supposed to lower its price to you but there is no requirement to move quickly to do so. Also, if you are an existing customer, make sure your capped price is as low as what's being offered to new customers, because some companies may seek to expand their business by having existing customers subsidize lower caps being offered to new customers.

Also, consider buying your heating fuel from a "Fuel Co-op," which are generally nonprofit groups that buy oil on the open market in large quantities and pass on the savings to consumers. In some areas, you may also be able to buy heating fuel from a "Fuel Buyers Group," which are also nonprofit companies that buy from an oil company at a discount price, and pass on the savings to its members.

The people who dodged the heating fuel cost bullet this year may be those who opted to buy all of their heating fuel under a pre-paid heating fuel contract before prices surged.

Most heating fuel distributors are no longer offering these lock-in-price contracts due to the shortage of supplies, volatile prices and higher costs of storage.

If you do find a company willing to offer you a pre-paid contract, read the agreement carefully noting all terms, conditions and penalties. Also check the company?s references and pay with a credit card for the best protection if you need to dispute a charge.

Beware of disreputable companies; last year, the State of Connecticut reported that at least three companies defaulted on customers pre-paid contracts, because they found themselves in financial straits and were unable to purchase the fuel they had promised to their customers.

Heating costs are not the only cost that will be affected by higher fuel costs. If you plan a trip this winter, make sure to book your trip in advance and plan the return on a weekend. This can save over 60 percent on the cost of round trip airfare. Also, if you will need to rent a car, fill the tank yourself to save even more.