Annual inflation, and concerns over heating oil prices that inevitably rise during the winter heating season have driven home heating oil consumers to seek out companies that offer locked in pricing.
When the price for #2 home heating fuel rose above $4.00, up to almost $5.00 per gallon this past summer, consumers scurried to find an oil dealer who would give them a contract for a reasonable "locked in" price. While the decision at the time ensured the consumer would not pay more than the locked price, few considered the price of heating oil could drop so much, or so fast. The consumers who locked in at $4.00 to $5.00 per gallon, now face the reality that they may be paying anywhere from $1.00 to $2.00 more per gallon than neighbors who did not lock in -- even if they buy their oil from the same dealer.
While there is no single answer for all consumers who are locked in at a price that is above market rate, the one thing anyone with one of these contracts can do is read the contract -- every word of it, and look for a loophole, or lack of specific language that will allow them to either discontinue purchasing oil at the contract price, or at least some room to re-negotiate with the dealer.
In many cases, the dealer may have worded the contract in their own favor, leaving out terms that specify exactly how much oil you need to buy at the lock price, or terms which may leave them without recourse if you discontinue accepting deliveries.
For those who wonder if the dealers are making a higher profit and can afford to let them out of the contracts, the answer is somewhat unclear. By law, heating oil dealers who accept pre-payment for contracted heating oil sales, must in-turn purchase wholesale contracts from wholesale suppliers to insure they can deliver the oil they've sold at the price they've committed to.
Many dealers, in-turn, signed contracts with wholesale suppliers during the summer when prices were high, and are in virtually the same position as the consumer. Your oil dealer may have contracted to buy oil at the higher price too, and their suppliers are not letting them out of the contract.
In general, a contract with an oil dealer to buy oil at a locked in price, is like any other contract; enforceable and with possible civil penalties for breaking the contract, BUT, and this is a big "but"... the specific wording of the contract may leave you some wiggle room.
For instance, if the specific wording says; "this contract allows [you] to purchase up to X number of gallons of oil", but does not specify that you must purchase a minimum number of gallons, you may be off the hook.
If the contract specifies that; "[you] agree to purchase all home heating oil from [name of dealer]", but is only signed by you and not your spouse, you may be able to discontinue accepting delivery, and simply have your spouse or another household member purchase oil elsewhere.
If you have not pre-paid and the oil has not been delivered, you have a better chance of finding a way out of the contract -- if you have pre-paid, chances are you will not get a better price, and will not be able to get any type of discount or refund.
If you are not sure about how iron-clad the contract you signed is, you may want to consult an attorney to see if there are legal reasons to allow you to renegotiate or break the contract, (although you should weigh the cost of potential legal fees against any savings the attorney find).
A final note -- you never know, heating oil prices could shoot back up just as fast as they've dropped, and you may find by the middle of the winter, that your "locked-in" deal is something you're lucky to have.