My Brother's Keeper

Originally published September, 2015

My older brother, who lives in Maine and is not a customer of mine, called me last summer requesting my opinion about an offer that he received from his oil company. The offer was to fix his price for oil at $3.75 per gallon for the whole winter. This would mean that he would not pay more than $3.75 no matter how high the prices might go during the heating season. If you remember anything about predictions for heating oil prices last spring and summer, you will remember that things were pretty uncertain, and $3.75 seemed like it was a pretty good deal. This is why he called me, because it seemed like a pretty good deal. Still something was bothering him, so he called his little brother, who sells heating oil, for his opinion.
 
Well, it turns out that it was not such a great deal after all! Prices came down to levels unseen since the early part of the century! I know that we are only 15 years into this century, but I like the way it gives gravity to the fact that fixing prices for last heating season would have been a bad thing to do. Heating oil was selling for over $1.25 per gallon less by the end of the heating season.
 
You may be asking, "What advice did he give to his dear brother?" Well, I told him not to do it! Anyone who knows me and how I write my contracts for heating oil prices (and my brother should have known this) knows that I had a bad experience in 1992 offering a fixed-price contract and swore to never do it again. What I have been doing ever since is offering Cap Price contracts, which sets the highest price per gallon but allows for customers to pay a lower price if prices come down. There is a fee for this option, which covers the difference in price (even if it goes down by $1.25, as it did last season).
 
If you are wondering if my brother took my advice, you'll have to ask him, because I still don't know. So much for brotherly love, but you can be sure that I will give you the same advice as I would give to my brother when it comes to heating your home.

Bob 

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