≡ Menu

Home Heating Oil Price Predictions for the 2011/2012 Heating Season

Click here to access all of my FREE personal finance Excel spreadsheets!

Click here for my 2016 home heating oil price prediction

Should you prepay for your home heating oil this year?

Pre-buying home heating oil (pre-paid or pre-purchase contracts) can be a great way to save money on energy costs during the cold winter heating season. However, if you’re not fully aware of the risks, you can also end up paying way too much money for heating oil as many consumers found out in 2008. In extreme cases, you can even lose your entire upfront payment as residents of Mid-Coast Maine found out when the local heating oil delivery company filed for bankruptcy.

While it might be hot outside right now, the winter heating season is just around the corner! For many folks in colder climates, now's the time to start planning for your winter heating costs.

Predicting home heating oil prices for the upcoming heating has become one of the most popular series of articles each year on my personal finance blog Trees Full of Money.

While I provide this service for entertainment purposes, I am proud to say that I have developed an exceptional track record over the last 4 years in recommending the most beneficial payment option provided by most major heating oil delivery companies in the northern regions of the United States.

Before I provide this year’s recommendation on rather or not you should lock in today’s home heating oil prices, here is a quick review of some of the more common payment options offered by many local heating oil delivery companies.

The Spot Delivery or “Pay As You Go” Plan:

This plan means that you pay whatever the current cash price is for heating oil for the day it was delivered. This plan is excellent is you know for sure the price of oil will remain unchanged or even drop over the course of the heating season. Unfortunately, the price of oil has been so volatile over the last few years that making this prediction with any level of confidence is nearly impossible.

The “Budget” or Price Protection Plan:

This plan has been my favorite over the last few years. You sign a contract for the delivery company to deliver oil to your home for the entire heating season. The best part about most budget plans is they offer a “cap” or “price ceiling” on the price you pay per gallon, but unlike “pre-buying” contracts, if the price of a gallon of oil goes below the price per gallon you budget for you get the advantage of paying the lower price. As an added advantage, your payments are spread out evenly over a 10-12 month period so that you are not faced with gigantic heating bills during the coldest months of January and February.

The Pre-Buy or Pre-Pay Plan:

When you pre-buy or pre-pay your home heating oil, you pay for your home’s total estimated oil usage for the entire winter season upfront. The price you pay is usually competitive with the current spot delivery prices on the day you sign your contract. Pre-buy plans are excellent if you have the funds available, and expect the price of oil to rise over the winter season.

Should You Prebuy your home heating oil for the 2011-2012 winter heating season?

My prediction this year comes with several cautions.

First, after observing what my father-in-law experienced last year when the oil delivery company he prepaid filed for bankruptcy and he lost the balance in his account, I have come to appreciate the value of being able to “hang on to your money”. Before I would consider prepaying for my home heating oil in the future, I would absolutely want to make sure that the company I was dealing with had a solid track record and was well grounded in the local community.

Second, the price of a gallon of oil is trading approximately in the middle of the range it has fluctuated in over the last few years which means that in a “perfect market” the price of oil has just about as good a chance of going up as it does of going down.

When oil prices are historically low (as they were in 2009), you can safely bet that prebuying your heating oil (at a slight discount under current cash prices) will offer you the best price protection. However, when prices are historically high (as they were in 2008 at over $4.50 per gallon) I tend to shy away from prebuying contracts as there is very little upside in price but plenty of room (historically) for the prices to go back down.

With prices in the “middle” of the two extremes I have less confidence in making an accurate prediction of whether or not you should prebuy this year. With that said, with my local oil delivery company offering a pre-purchase price of $3.89 per gallon of heating oil this summer, I will NOT be prebuying my home heating oil in 2011/2012 winter season.

I believe the price of a barrel of oil will decline back down to a more “natural” price range of $80-85 over the next 8 months and we’ll see home heating oil prices drop slightly to between $3.35 to $3.65 per gallon here in Maine(based on my best educated guess on the factors that affect the price of oil).

If given the opportunity, I would consider pre-buying heating oil if I was offered a price of $3.50 per gallon or less, but at $3.89 per gallon, I’m going to pass this year and simply “pay as I go”.


THANKS for reading my personal finance blog! You can learn more about my site here or you can jump right into the juicy stuff by reading my family's own detailed debt free success story (which has formed the foundation of this site). Please consider signing up for my free email updates!

{ 78 comments… add one }

  • Ben September 16, 2011, 10:17 am

    Hi Pam,

    I’m still holding to my June assessment in that I will not pre-buy my heating oil unless I can lock in at under $3.50/gallon here in Sounthern Maine. In my opinion, I still believe heating oil prices are more likely to remain relatively steady or go down, rather than go up over the next 6 months. My local delivery company is still offering a “pre-buy” that is significantly higher than the current “spot delivery” price, it just doesn’t make any sense to me to prebuy at the current prices being offered in my area.

  • Paul Brucker September 16, 2011, 3:26 pm

    Do you have a specific dollar amount for the average home heating costs for the 2011-2012 winter? This article fails to specify.

  • Miles September 23, 2011, 4:50 pm

    I just locked in a pre-buy price of $3.42/gal with Arbor Oil in Cheshire, CT, down from $3.69/gal just 2 weeks ago.

  • Ben September 23, 2011, 5:08 pm

    That’s awesome Miles! Nice to hear you had the patience to wait it out for a better price!

  • Alison October 3, 2011, 8:58 pm

    I really appreciate finding your blog! It was really helpful. I have been avoiding all of this for the past few years but I did get slammed years ago when prices got high so I am considering the value of locking but had no idea all the options and thought that has to go into this decision. I thought I might ask your opinion.. I can lock in at 3.409 / gallon for the whole year but with a $109 to buy in – which would bring the price up to about 20 cents /gallon or for $29 I can buy up to 400 gallons and take my chance on the rest (we use about 500-550/year OR for 25 cents / gallon, I can lock the max price in @ 3.60 /gallon (and get the oil for whatever the price is for the day it is delivered). You said in this blog that you would not lock in unless you could get for less than 3.50/gallon – so I wonder if any of these would quality for that..? I appreciate your thoughts.

  • Kevin O'Leary October 7, 2011, 4:07 pm

    Thanks for sharing your thoughtful take on managing this significant expense. Keep it going…I’ve bookmarked you to get your take in future seasons.

  • neighboroil dot com October 29, 2011, 11:24 am

    We have had many members join from this site as it is a great resource for real information on home heating oil. Again, there are ways to control what you pay for home heating oil. We do it everyday — the last member to join from here paid $2.71 per gallon — 3 weeks ago

  • Mike November 2, 2011, 8:56 am

    Just paid $3.459/gal for a fill-up on Nov 1 here near Allentown, PA. So I’m going pay-as-you-go. That fill will last me (usually) into Jan.

    We’ve been without distributed electric (from PPL) since Oct 29 (due to massive snow storm), but this is where I’m glad I have oil for my hot water and backup heat source. That with a 8kw generator and I’m self- sustained, albeit, paying about $20/day in gasoline to run the generator. But beats staying at a motel. The only thing we miss is the high-speed internet over the cable — fortunately we have smartphones so we’re not out of touch.

    Lesson here: be prepared and have multiple backups. We also keep other emergency supplies and 10-20 gallons of water.

    Generators sold out in the area within a day.

  • Jann November 8, 2011, 8:53 am

    Hi Ben,

    Do you have any idea if your recommendations would also pertain to Atlantic Canada or where I could look for Canadian predictions?
    My oil company is currently offering $ 1.139 per/litre price cap for 2011/12 season.
    Many thanks for any help.
    Best regards from Halifax, Nova Scotia,

  • Kelly November 15, 2011, 4:09 pm

    I am a single mom and I am currently on unemployment and can’t seem to find a decent job. I currently have 150 gallons of heating oil and I am very worried about this coming season. i have an older house so it is not insulated very well. I have turned the thermostat down to 60 to kick on if it gets lower then that. We have electric blankets and heaters to supplement. I usually keep my heat at 66 or 68. I know this is going to be cold but I am trying to figure the best way to get through the winter, pay for heating oil while feeding my children. i live near Pittsburgh PA. Can you give me your best estimate if I keep my heat down how much oil I will need for the season. When set at 66-68, i would go through between 500-600 gallons.

  • SamB November 15, 2011, 4:25 pm


    Contact your local electric/gas company rightaway and ask for an energy audit. they charge all their customers a small amount in the monthly bill to pay for these kind of audit services. I got my whole house insulated for just $350. They will do a thermal imaging of the house and add any extra insulation and seal gaps for a minimal charge. This is like free money. I am not sure if you meant 56-58 instead of 66-68 because that seems very warm, almost hot. I set my thermostat at 62 and with the added insulation we sweat in night. The better the insulation the more the heat is trapped inside, so less oil usage. Even if the utility company has no such program, I would spend some money myself and hire a contractor to insulate the house as much as I can.

  • Kelly November 15, 2011, 4:30 pm

    I know Sam, i wish I could afford to hire a contractor I cannot. Thank you for your input. No, I meant 66-68. When it is 0 degrees out, and you do not have good insulation, it is comfortable. We are just going to layer up. heck the house I grew up in, i could see my breath while laying in bed and I survived:) I will contact my electric company and see if they offer such house audits. Thanks for the info!!

  • "Sandy" Levey November 15, 2011, 5:51 pm

    I found the “blogs” and info very usefull as it gave me a sense of what’s going on with heating oil and the issues people have. Thank you

  • Kelly November 15, 2011, 5:57 pm

    back to my original comment, does anyone have an estimate on how much more heating oil I will probably need?

  • Ct heating oil price November 22, 2011, 12:11 pm

    You can also go to the smart living center in orange ct and learn of many ways to save money on energy. They also give out a free “grab bag” of energy saving devices that you can put on your taps to save water, and on your doors to conserve heat. It is a great place to learn and even take the kids. Below is a link to the site that has more information and directions.
    @ Kelly – it is real hard to estimate how much oil you will use in a year. It depends on how cold it is out side, how many square feet your heating, how insulated the building is, and how efficient your furnace is, do you heat hot water with oil?

  • Kelly November 22, 2011, 1:12 pm

    Im have electric hot water heater. I was asking a ballpark estimate when the thermostat was 68 and used 500-600 gallons of heating oil and now set at 60. I live in PA and my hose is not insulated very well. I did check with my electric company of a home audit and they don’t start that until after the new year when the funding is available again but I am on the list. My ex mother in law is also getting us an EdenPURE heater that is supposed to supply heat for up to 1,000 square feet.

  • laura kealey November 23, 2011, 1:09 pm

    After reading your column, I don’t quite understand why you opted for the “pay as you go” plan for this year given the unknowns re this year’s oil prices –why did you not choose a price protection (budget) plan instead which would seem safer, and allow you to pay less when (and if) oil prices drop?

  • Ben November 28, 2011, 10:10 am

    Hi Laura, sorry for the delayed response!

    Currently, in my area at least, you are required to pay a “premium” over current cash delivery prices if you sign up for the budget plan. This increased premium is part profit for the oil delivery dealer and part “insurance” for the oil dealer in the event the price of oil were to rise substantially over the winter yet the dealer still had to sell it to you at a “fixed” price.

    You can see where this can be a gamble for the consumer and the dealer…

    In my area, this premium is currently about 30 cents more per gallon which is a substantial amount of money when you’re talking about 800-1000 gallons of oil.

    In my analysis, I concluded that it would not make sense to “budget” or “pre-buy” my oil unless I could do so for under $3.50 per gallon (which prices have yet to do in my area).

    Some people have headed my advice and jumped on the <$3.50 pre-buy option and with oil prices creeping back up, it looks like the advice has worked for them. In the meantime I'm still paying as I go believing that the 30 cent premium to "lock-in" on a budget plan is not worthit (yet).

  • Ben November 28, 2011, 10:24 am

    Hi Kelly! My best guess you will burn about 400 gallons with your thermostate set at 60 vs burning 500-600 with the thermostat set at 68.

    Does PA have special heating oil assistance/programs for families in need?

  • Kelly November 28, 2011, 12:27 pm

    I make too much money for any kind of assistance on unemployment, even though it is half my normal income. That’s ok, we will manage. So I can expect to save around 100 gallons of oil. That is $400. Thank you.

  • Len December 1, 2011, 10:37 pm

    Get Petro, they have a ceiling and floor plan, wherein they will deliver the oil based on what you choose. The price remained at the lower price, eventhough the market goes up. They gave me a $3.29 last year and still the same this year. This will be fixed, and will never go up. If the oil goes down, they will give me a lower price but will never go up. I have economy fuel before which was recommended to me, I used them for almost 5 years, but they are very expensive and unreliable. I asked them one time to stop delivering my oil because my husband bought a business and I’m kind of tight with cash. Then, the following month, I asked them to put oil again in my tank, and after few weeks my boiler stopped working, I don’t know for what reason. They told me they can’t fix it and telling me that I bought cash from other supplier. How can I do that, I don’t have enough cash. I almost sued them for not fixing my boiler, and it was really cold that night. If not because of my neighbor who recommended them to me, I already sued them for suspecting me that I bought oil from other and from not fixing my boiler. DOn’t get Economy fuel oil. Very expensive and unreliable.

  • Kristin December 3, 2011, 11:55 am

    I live in PA and am moving into a 2000 square foot, 2 story home in mid-January. It is a well insulated, brick colonial and has all new replacement windows throughout. The house feels really tight. No drafts at all. It also has a fairly new Burnham furnace with the hot water tank attached to it. There is no other hot water heater in the home. I’ve never bought oil before. Can you tell me what to expect in monthly usage? I’m trying to determine whether I want to pay as I go or if I want to go on a monthly contract.

  • Nancy Stone December 8, 2011, 2:24 pm

    I just spent the last few hours calling and computer searching for the best heating oil prices in Wilmington, DE. I have also been monitoring the place where I got my last delivery in 2011 for a new tank that was installed. I totally agree with Ben. Lawmansoil is a site that you prepay for your delivery online and they deliver within 24-48 hours. The owner, David, is a delight to speak to and very knowledgeable. In other words customer service is the best I have ever found. As of today the price per gallon delivered with a minimum of 150 gallons is $3.379. Should your tank not need the full 150 gallon minimum a credit is applied to you account and used for future deliveries. So far today his price is 10-50 cents per gallon cheaper than anyone else delivering in my neighborhood. I know some people prefer billing and having 30 days in which to pay but by pre-paying online you can save about $50. per delivery. It is definitely worth saving for. If you want to ask David his opinion on the amount to be delivered without ending up with a credit he will tell you how much to order based on your tank size and the level of existing oil indicated on your tank. He even called back last evening when I was having issues with his web site and I wasn’t even placing an order yet. The company is based in NJ. I highly recommend that if you live in my area to check out this website before ordering oil.

  • Ben April 24, 2012, 3:29 pm

    Hi Everyone!

    I’ve posted my heating oil predictions for the 2012/2013 winter heating season on the home page of my blog! thanks for reading!



  • Craig May 20, 2012, 10:27 pm


    I am trying to check our prices for heating oil in NYC for the year 2011. Does anyone know a source for that information. We bought from Hess but a market rate for delivery would be just as good. thanks

  • here. July 9, 2012, 7:21 am

    Admiring the persistence you put into your site and detailed information you offer.
    It’s great to come across a blog every once in a while that isn’t the same out of date rehashed information. Fantastic read! I’ve bookmarked your site and I’m including your RSS feeds to my Google account.

  • Melanie September 1, 2012, 4:21 pm

    Hey there, I think your blog might be having browser compatibility issues.
    When I look at your blog site in Safari, it looks fine but when opening in Internet Explorer, it has some
    overlapping. I just wanted to give you a quick heads up!
    Other then that, terrific blog!

  • Ben September 2, 2012, 10:01 am

    Thanks for the heads-up Melanie, what version of IE are you using? Was the issue displayed on my Home Heating Oil price prediction article?

Leave a Comment