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Pre-Buy vs Price Cap vs Market Price: Which Heating Oil Plan Wins?

7 min read · October 2026

Every fall, oil and propane dealers offer the same three choices: lock a price now, pay a fee for a ceiling, or pay whatever the price is on delivery day. The explanations almost all come from the dealers selling the plans. The arithmetic is simple enough to do yourself — and it shows one thing the flyers don't: which plan wins depends entirely on where prices go, so the real question is which outcome you can least afford.

Compare Your Dealer's Offers

Last winter's deliveries are the best guide. Oil or propane — the math is the same.
Anything you use beyond this is bought at the market price.
Caps are charged one way or the other. New Hampshire's energy office cites examples of about 20¢ a gallon, or a one-time $50–$100.

What Each Plan Costs This Winter

The Three Plans in Plain Terms

  • Market price ("will-call" or "float"). You pay whatever the dealer charges on delivery day. No fee, no commitment, no protection.
  • Pre-buy (prepay or fixed). You commit to a number of gallons at a locked price, usually paid up front or in installments before winter. If prices rise you win; if they fall you keep paying the higher locked price.
  • Price cap ("ceiling" or "downside protection"). You pay the market price, but never more than the cap. You pay for that protection with a fee — per gallon or one-time — and the cap is usually set above the pre-buy price.

Which Plan Wins Depends Only on Where Prices Go

Run the default numbers above — 800 gallons, a $3.79 pre-buy, a $3.99 cap with a $100 fee, $3.85 today — across a range of winters and a pattern appears:

  • If the winter averages below the pre-buy price, paying market is cheapest. The pre-buy customer is stuck at $3.79; the cap customer pays market plus the fee.
  • If it averages above the pre-buy price, the pre-buy is cheapest — its locked price is below the cap.
  • The cap is never the cheapest plan when judged on the season's average price, as long as the cap sits above the pre-buy price and you don't pre-buy more than you use. It comes second in every scenario.

That isn't a reason to dismiss caps. It's what insurance looks like. A cap is the only plan that is never the worst: it doesn't leave you overpaying all winter if prices collapse, the way a pre-buy does, and it doesn't leave you exposed to a spike, the way market price does. The calculator's last column shows exactly that — how much each plan could cost you versus the best plan in hindsight.

One thing averages hide. Prices move within a winter. A cap pays out on every delivery during a short spike, even if the season's average ends up below the cap. If your deliveries tend to land in January and February, when cold snaps push prices up, a cap is worth more than the averages above suggest.

How to Decide

  • If a $500 surprise in February would hurt, take protection — a pre-buy if you're confident of your usage, a cap if you'd rather not commit.
  • If you can absorb swings, market price has no fee and no commitment, and over many winters fees and locked-in losses tend to cost something.
  • Never pre-buy everything you expect to use. A mild winter can leave prepaid fuel unused. Contract for less — last winter's usage minus a margin — and buy the rest at market.
  • Read the unused-gallon clause. New Hampshire's energy office notes that unused credit is typically applied to later fuel at the price at that time, not your locked price, and that the contract must spell this out.
  • Check the dealer can deliver. A prepaid contract is only as good as the company holding your money. New Hampshire's guidance advises confirming the dealer has secured the fuel it's selling before you sign.

To time your orders on market price, our heating oil and propane days-left calculator turns your tank gauge into a countdown. And if you're comparing fuels rather than plans, see propane vs heating oil or the heating cost by fuel calculator.

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Quick Facts

  • Pre-buy wins when winter averages: above your locked price
  • Market wins when it averages: below it
  • Cap: never worst, rarely best
  • Example cap fees (NH): ~20¢/gal or $50–$100

Frequently Asked Questions

Is it worth pre-buying heating oil?

Only if the average price you'd otherwise pay over the winter ends up above your pre-buy price, and only for gallons you are sure to use. Pre-buying wins whenever the season's average market price comes in above the locked price, and loses whenever it comes in below. Contract for less than you expect to burn — usually about last winter's usage minus a margin — so a mild winter doesn't leave you with prepaid fuel you can't use until next year.

Is a heating oil price cap worth the fee?

A cap is insurance, not a bet. Judged against the season's average price, it is rarely the cheapest plan: if prices fall, paying market is cheaper because you skip the fee, and if prices rise, a pre-buy is usually cheaper because its price is below the cap. What a cap buys is protection against a spike without being locked in if prices drop. New Hampshire's energy office gives examples of cap fees of about 20 cents a gallon or a one-time $50 to $100.

What happens to unused pre-buy gallons?

It depends on the contract, which is why you should read that clause before signing. A common arrangement is that unused prepaid money is kept as a credit and applied to later deliveries at the price at that time, not at your locked price. Some contracts refund it, and some don't. Ask before you sign.