Should You Lock In Your Winter Oil Prices?

Prepaying for oil and gas comes with big risks.

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Last night, I spoke with CNBC's Carmen Wong Ulrich about how to hedge your heating bill this winter. Many heating companies offer deals that let you lock in the price of oil ahead of time so you don't get unexpectedly high bills if the price of oil goes up this winter. But there's a big downside: If the price of oil goes down, you lose, because you're stuck paying those higher prices.

Here are some tips:

  • Contact your local heating company. Many companies offer special programs that let consumers either lock in prices in advance or spread out hefty winter payments over the entire year. But the easiest thing to do is to put aside cash before winter begins that will serve as a cushion in case prices go up. That way, you don't risk paying extra if prices end up going down.
    • Consider the trends. No one knows whether oil prices will go up or down this winter. While they peaked during early summer, they have been coming down over the past several months.
      • Check out your options. Two websites, PriceEnergy.com and MyOilHeat.com, let you lock in prices or purchase oil in bulk at a discount. (Both are available only in the Northeast.)
        • Look out for future innovations. This service hasn't started yet, but customers will soon be able to go to fuelbank.com, buy gas online at current prices, and then redeem the gallons later, with a debit card, at a gas station.