Market Price, Prebuy and Price Cap: Which to Choose

Written on: July 7, 2021

pay fuel bill new yorkDowney Energy offers several ways to buy propane gas or heating oil– but deciding which option to choose can be confusing, because each has its good points.

As with any significant buying decision, it pays to be informed – which is why we’ve prepared a short summary of each option to help you decide what’s best for you.

Market Price

Just like stocks on the stock market, the cost of fuel changes daily, with no limit about how high or low it can go; this is called the market price. At market price, you can take advantage of falling prices without having to pay a fee – but if they go up, as they often do during periods of high demand, you’ll have to pay the higher price. 

Pre-buy plan

Purchasing propane in advance of heating season at a fixed rate locks in a price on all the gallons you pay for, regardless of when they’re delivered and no matter what happens in the market. This Pre-buy option protects you from rising prices, but it also prevents you from realizing a discount if the market price drops.

Price Cap plan

A Price Cap Price Protection plan limits how much the price of propane can rise, but not how far it can fall. In other words, you’ll know the maximum you can pay for fuel, but can still take advantage of lower prices if they drop. We charge a fee for Price Cap service because it requires us to buy insurance from our own suppliers in case the market price drops; the fee you’re charged covers the cost of that insurance.

The Bottom Line

As you can see, each price option has its benefits and risks, which makes choosing an option a matter of personal choice. To summarize:

Still have questions about what pricing option is best for you? Contact the pros at Downey Energy today to learn more about propane and heating oil delivery in the Hudson Valley!