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Price Protection

Plan Payment Option Plan Price Today's Price
Pre-Buy 1 payment $2.499 $
Pre-Buy 3 payments $ $
Budget Cap 10 payments $2.599 $
Cap 1 Pay within 15 days
(after delivery)
$2.599 $
Cap 2 Pay within 15 days
(after delivery)
$ $

Five Options for
Protecting Your Fuel Prices

Energy prices have become very volatile in recent years, which means that the price of heating oil can rise or fall quickly, making it difficult for customers to anticipate their costs. Downey Energy offers customers several ways to protect their oil prices against changing costs through our Price Protection programs.

Customers can choose to lock in their oil price for an entire heating season. There are two simple options (Pre-Buy with one payment and Pre-Buy with three payments) that fix the price with no possibility of an increase or decrease. The other two options, the Cap Plan and Budget Cap Plan programs, also lock out the risk of inflation while enabling you to take advantage of falling prices. If the daily price is lower than the capped price for any of your deliveries, we charge you the daily price instead of the capped price, so you benefit from falling prices.

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About Our Price Protection Programs

Here is a detailed look at our four Price Protection programs:

Pre-Buy with One Payment

When you sign up for the Pre-Buy/One Payment program, you agree to buy your entire season's supply (or a portion of it) at a predetermined price. That price will remain in effect until you have purchased all your contracted gallons or the contract expires (whichever comes first).

Pros: You will pay our lowest preseason price for every gallon you agree to purchase. The risk of inflation is eliminated, and you make no payments during the heating season. There is no fee for this program.

Cons: Your price cannot decrease during the life of the contract. If the price of heating oil should decrease, you will not receive the lower price.

Pre-Buy with Three Payments

When you sign up for the Pre-Buy/Three Payment program, you agree to buy your entire season's supply (or a portion of it) at a predetermined price. That price will remain in effect until you have purchased all your contracted gallons or the contract expires (whichever comes first).

Pros: You will pay a preseason price for every gallon you agree to purchase and pay in three installments. The risk of inflation is eliminated, and there is no fee for this program.

Cons: Your price cannot decrease during the life of the contract. If the price of heating oil should decrease, you will not receive the lower price.

Cap Plans

This is a premium Price Protection program for customers who want to lock out inflation while also taking advantage of price decreases when they occur. Your price for each delivery will be either the capped price (if it is lower than the daily price) or the daily price (if it is lower than the capped price.) Payment is due 15 days after delivery. 1% per gallon discount for payment within 15 days after delivery.

Pros: You will pay the lowest available price at delivery for every gallon of fuel.

Cons: There is a cost associated with protecting an oil price against the risk of sizable price swings in both directions throughout the heating season, and this plan carries a per-gallon fee to cover the cost of the two-way price insurance that we purchase on your behalf.

Budget Cap Plan

This is a premium Price Protection program for customers who want to combine the best possible price protection with the convenience of monthly payments through our Budget Plan. The Budget Cap Plan locks out inflation while also passing on price decreases when they occur. Your price for each delivery will be either the capped price (if it is lower than the daily price) or the daily price (if it is lower than the capped price.)

Pros: You will pay the lowest available price at delivery for every gallon of fuel. You will pay for your fuel in 10 monthly payments.

Cons: There is a cost associated with protecting an oil price against the risk of sizable price swings in both directions throughout the heating season, and this plan carries a per-gallon fee to cover the cost of the two-way price insurance that we purchase on your behalf.

Important Note About the Pre-Buy Plans

The Pre-Buy programs are intended to make your prices predictable and eliminate the threat of inflation. They do not guarantee that you will get the best price, because the price can fall below your contracted price after you have purchased your oil. This is unavoidable when you fix your price, because we follow best industry practices and purchase your price-protected oil before we offer it to you for sale. Our suppliers hold us to our contract terms, and we expect our customers to honor their contracts as well.

To ensure that you will receive the lowest available price at delivery, you can select the Cap Plan or Budget Cap Plan program. Both programs carry a per-gallon fee to cover the cost of two-way price insurance.

Frequently Asked Questions About Price Protection

What causes heating oil prices to rise sharply?

A: (This answer comes from the U.S. Energy Information Administration.) Home heating oil prices sometimes can change dramatically in a short period of time. Why does this happen? If refiners, wholesalers, dealers and consumers have enough heating oil in storage and temperatures do not drop rapidly, prices hold fairly steady (assuming crude oil prices are also not changing much). However, a rapid change to colder weather can impact both supply and demand; people want more fuel at the same time that harbors and rivers are frozen or delivery systems are interrupted. During this time, the available heating oil in storage is used much faster than it can be replenished. Refineries normally cannot keep up with demand during these cold periods. Wholesale buyers become concerned that supplies are not adequate to cover short-term customer demand and bid up prices for available product. In the Northeast, for example, additional supplies may have to come from some distance away, such as the Gulf Coast or Europe. It costs more to transport heating oil from these sources to the Northeast, and it also can take two to three weeks to arrive. During the time that resupply from distant markets is occurring, the supply of heating oil that sellers in the region have in storage drops further, buyers' anxiety about finding heating oil in the short term rises, and so do prices - sometimes sharply - until new supply arrives. Additionally, during very cold periods, prices of other heating fuels (such as natural gas or kerosene) may increase even more than heating oil prices. In this case, some consumers may switch from using their normal heating fuel to using heating oil, thereby increasing the demand for heating oil.

Do heating oil dealers make more money when oil prices rise?

A: We can only speak for ourselves. Downey Energy is committed to fair business practices, and we never take advantage of price changes. We adjust our daily price of heating oil to account for changes in our costs, particularly the wholesale price of heating oil that we pay.

Why is there a fee for the Cap Price programs?

A: We charge a fee for the Cap Price programs because the cost of insuring the price against both sharp rises and drops in price throughout the heating season is too high for us to absorb. It would not be fair to build the cost into our overhead, because only Cap Price enrollees receive the value. To understand the value, it helps to think about buying gasoline. Imagine if a gas station guaranteed your maximum price for a full year of fill-ups but promised to charge you the lowest available price every time you filled your tank. It's an unusually good deal, and you would expect to pay a fee. Our Cap Price offers a similar guarantee.

What Price Protection program does Downey Energy recommend?

A: We do not recommend one program over another. We offer options so that every customer can choose a program that appeals to them. Without knowing where oil prices are headed - which we don't - it is impossible to predict which program will wind up delivering the best value each year. For example, the Pre-Buy programs provide excellent value when prices rise but can wind up costing you more when prices fall after you execute your contract. Our recommendation is that you choose the program that seems most attractive to you and stick with it year after year.

Should I protect all the gallons that I expect to use or just a portion of them?

A: This is a matter of personal preference. If you are protecting only a portion of the gallons you expect to buy, you will pay our daily price for the additional, unprotected gallons you require.

How do you set the capped price in the Price Cap program?

A: This can be quite a complex calculation, because there are direct tradeoffs between the price cap and the fee. Our goal is to set the price cap as low as possible to offer maximum protection without pushing the fee too high. The lower we set the cap, the higher the price we pay for to insure the price, because it costs more to protect a lower price. We first determine how large a fee we will charge and then provide the lowest price that we can insure for that fee.

What happens if I don't use all the gallons I agree to buy?

A: Your Price Protection contract carries an expiration date. If you are in a Pre-Buy program and we have not delivered all the gallons that you contracted for by that date, we will reimburse you for the undelivered gallons. If you are in a Cap Price program and we have not delivered all the gallons that you contracted for by that date, we will switch you to our daily price upon expiration of the contract.

What happens after I receive all my price-protected fuel?

A: We will continue to deliver your fuel as we normally do and charge you our daily price.

Why do some companies offer lower prices for heating oil?

A: Heating oil companies are independent and each one sets their own price based on their own formula. Downey Energy is a full-service company that provides comprehensive services, such as expert service and installation and 24-hour emergency services. We deliver premium fuel that is treated for better performance. We maintain an excellent vehicle fleet and use high-end diagnostic equipment to test your equipment's performance. We also carry insurance that protects you from liability, and we provide extensive training and excellent employee benefits. Experience has taught us that our customers appreciate our staff and our comprehensive service, so we do what is needed to meet your needs and expectations and build the cost of our overhead into the fuel prices. Companies that charge less generally have fewer services, less training, less insurance and less equipment, and they sell fuel without additives.