Home heating oil providers offer budget plans, special discounts

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Editor's Note: Today, The Express talks to local home heating oil providers as we begin a week-long series on the effects of increases in the cost of gas and oil.

LOCK HAVEN - Summer's vivid green leaves are rapidly transforming into autumn's rich gold, orange, red and brown foliage. Before long, there'll be more leaves on the ground than in the trees.

The night air has taken on a bit of a chill that lingers well into the morning. Those who haven't already will soon put away their air conditioning units and close up their swimming pools.

School bus traffic and children walking to school have once again become a part of the morning commute to work.

There's no doubt about it - fall has arrived.

With the change in seasons comes another change, one that may not be quite as welcome. But it's one that's on nearly everyone's mind: "How are we going to heat our home this winter?"

The country's volatile economy has left many homeowners and renters out in the cold, still looking for an answer to that question. Oil prices fluctuate daily, even hourly, taking many on an emotional and financial roller-coaster ride. Some have opted for cheaper ways to keep warm this winter, while others have simply tried to come up with a plan to avoid insurmountable heating bills.

Home heating oil suppliers may seem like the bad guys during these tough times because it's their name at the top of many of those bills. However, it's clear that local suppliers have worked hard to come up with programs and purchasing plans with the best rates possible for their customers this heating season.

Budget plans are a popular solution. Providers use a customer's past oil usage to estimate how many gallons they might use over the coming heating season, and then multiply that by an estimated average price per gallon. They then take that total and divide it into 10 or 11 monthly payments, depending on the length of the provider's budget plan program.

"So, instead of paying a really large amount after one delivery, payments are extended over a longer period of time. In some cases that could cut a customer's winter fuel bill in half," said Stacey Ingram, company representative for Ingram Fuels Inc. of Howard.

Ingram's company gives its budget plan customers an extra discount on the per gallon price. R & M Gas & Oil Co. of Mill Hall also offers a 10 cent discount per gallon to budget plan customers. KW Gas & Oil Co. of Lamar discounts its per gallon price by 10 cents when a budget customer has a credit balance in their account at the time the oil is delivered.

Most providers also review their budget customers' accounts about halfway through the program to ensure they are charging customers accurately, and then adjust the bills accordingly.

Many companies, like R & M, have about the same number of budget plan customers this year as last year.

"A lot of that depends on what a customer feels comfortable with financially. Some are on [the budget plan] that weren't on before and some who were on [the budget plan] before want to see how it'll go with paying as they go," said Joe Walker, general manager of R & M.

Others, like Ingram Fuels, are seeing some changes in the number of customers enrolled in the budget plan. Though Ingram Fuels has kept a large number of its budget customers, owners and managers have also seen many switch recently from the budget plan to their prebuy plan, which Ingram attributes to the per gallon discount being higher for the prebuy program.

Under their prebuy program, customers must purchase fuel - at a big discount - before the heating season begins. They don't have to purchase an entire heating season's worth of fuel up front, but the big discount only lasts as long as the credited amount or until the program ends.

KW is offering a similar program, through which customers can buy oil at a fixed price of $4.29 per gallon. The provider purchased 500,000 gallons of oil for this offer, and the fixed price will end when the designated oil runs out.

The discounts continue for R & M customers, who can receive a discount of 10 cents per gallon when they pay their bill within 10 days of delivery.

Most providers are no longer enrolling customers in these plans and programs because they have already started. Budget plans for both R & M and Ingram Fuels began in August. KW cut off registration for all of its programs on Aug. 29.

These programs and special offers may have been designed with the customers in mind, but suppliers have had to make a few other changes that won't necessarily make customers happy. R & M is not offering lock-in pricing this year. Pickelner Fuel Company Inc. of Lock Haven increased its minimum delivery amount from 100 gallons to 125 gallons because of the higher costs of making deliveries.

Though they've tried to cushion the blow of rapidly rising oil prices as much as possible, local providers have also had to raise their rates according to the whims of the market.

"Our regular price on heating oil this year is $1.45 higher than last year at this same time. This is unfortunately over a 50 percent increase in cost per gallon," Ingram said.

Pickelner General Manager Pete Carlin had only marginally better news - that his company would probably begin the winter season with prices about a third higher than last year.

Customers can rest assured that suppliers will keep their eye on market prices, though, in the hopes of being able to pass along more savings.

"Some respected oil analysts (the ones I follow) predict the barrel of oil could drop to $100 per barrel in January of 2009, especially if the winter season starts out warmer than usual. The uncontrollable factors that impact pricing immediately, such as hurricanes and war threats, are always out there and we have to make adjustments accordingly," said Scott Knisely, owner of KW, in a letter sent to his customers in July.

"In the old days, fuel prices dropped in the summer when demand slowed and increased during winter months when demand peaked. The old rules no longer apply. As much as we'd like to be able to predict which way prices will go, what will trigger the shift and when it will happen, we can't."

Walker agreed. "Rates change by the hour. It's too hard to speculate anymore. There've been big fluctuations just in the last two or three years. Each year it seems to get more volatile."

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COMING TOMORROW: How are residents coping?