Over the past few heating seasons there have been several instances of unscrupulous heating oil dealers in the Northeast taking customers’ money and not delivering oil, leaving customers out-in-the-cold. These customers prepaid thousands of dollars for their heating oil expecting deliveries all winter long only to find that their supplier took their money and didn’t deliver their oil. How can you ensure that the company you give your money to will honor the contract or even be in business through the heating season?

Worried – Then Avoid Prepay

If you are worried, then the best way to ensure you are safe is to never prepay for your heating oil. This way, you don’t give your oil company money in advance of getting the heating oil in your tank. Some companies will not offer this option. Others will offer a budgeted payment plan, meaning they will divide the total cost of the contract by the number of months in the heating season and you will pay an equal amount per month. However, in the early (warmer) months of a budget payment plan you are typically paying for more than you are using and therefore “prepaying for some of your oil” and companies offering a budget payment option will often increase the cost per gallon fee for this convenience.

Research Your Heating Oil Company

If you must prepay, then it is important to do your homework. Ask questions of other customers and of your oil company. Find out who is behind the company and what reputation they have with other customers. Have they been around for a long time? What is their management history and experience? Do they have the financial strength to withstand the ups and downs of the heating oil market?

How Does Your Company “Risk Manage” Their Heating Contracts?

You can also call your oil company and ask them how they manage the risk of their price protection program. Your provider should be pre-purchasing their oil at a fixed price from their heating oil wholesale supplier so they can honor their commitments to their customers. Ask who their supplier is and if they are pre-purchasing their oil.

Signs of Trouble

There are a few warning signs of a company not able to fulfill their price protection agreement and potentially on the verge of financial ruin. If the company stops filling your tank and only gives you short fills, or if they don’t answer your phone calls or don’t follow through on promises, you have cause for concern. If you find yourself a situation like this, do not hesitate to contact your local police station or the state district attorney’s office to alert them of your concern. They will be able to advise you based on the laws of your state how to proceed.

Remember, it’s your money and you have the right to know it’s safe.