When is “Downside Protection” a Good idea?
There has never been a better time than now… and Here’s why.
With unstable market conditions, and heating oil prices at historic highs, we encourage our customers (Heating Oil & K-1) to add the Downside Protection option to their 2022-2023 plan. This guarantees that should heating oil prices fall – Colby & Gale will charge your account our lowest rate if our daily posted price is less than your “locked in” rate on the day of your delivery. By adding Downside Protection you are safeguarded if the price goes below your “locked in” rate at any time during the length of your contract. The Example (Below) uses 2008-2009 price trends with a pre buy of 1000 gallons to illustrate how Downside Protection can safeguard you if heating oil prices drop precipitously from high levels over the course of the winter heating season.
Simply put, when you add Downside Protection you’re safeguarded if the price goes DOWN.
Case In Point: 2008-2009
In 2008 the price per gallon for heating oil fell, in an 8-month period, from an historic high of $4.63 per gallon in July to $1.86 in March of 2009. (A precipitous drop fueled by the recession, a global drop in asset prices, rising unemployment and lower spending that led to less demand for oil by both consumers and businesses). Our customers at that time who opted to add our Downside Protection option to their 2008 Pre Buy contracts were safeguarded against the price drop and saved thousands of dollars over the course of the heating season.
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