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Fuel FAQs: Terms

Posted Jun 22, 2023

Welcome to our new series! Fuel FAQs. Are you new to oil or propane? A new homeowner? Dealing with fuel for the first time on your own?  You are not alone! We got you. Our Town is your town and we are always happy to explain all parts of the process that gets you.

When you are thinking about buying oil this year you may hear the following terms: Fixed, Pre-Buy, Fixed Budget or Rack Price.  They are defined below. 

  • Fixed = the price does not change regardless of market price changes.

  • Prebuy = pay up front for all your fuel required.

  • Fixed Budget = pay equal monthly payments.

  • Rack price = a variable discount rate which fluctuates based on the daily wholesale price of oil. Rack pricing may vary from vendor to vendor by a few cents.

So a fixed price for oil would be non variable.  You can also get propane from us at a fixed price. A fixed price can be pay as you go for propane but is almost always a prebuy for oil.  

A pre-buy, regardless of fuel type, means paying up front for the amount purchased.  You can buy anywhere from the minimum required amount for the pre-buy contract, and as much as you use the whole year.  

Fixed budget means that you are paying the same amount per month to the heating fuel company.  This often raises the price of fuel a few cents because you are essentially financing your heating fuel through the oil company.  

Rack Price, or Member Weekly Rate is a variable discount rate.  You are always saving something but the price rises and falls with the market.  This means you will save a lot if the market drops, and you will save more than a non-member if the price rises. 

Let us know if you have more questions about the prices of heating oil, propane or kerosene or kerosene alternatives.  We are happy to answer all your questions!

Our Town Energy Alliance, serving our communities in New Hampshire, Vermont, Maine and Massachusetts.