Which Payment Option Should I Choose for My Propane?
Paraco offers several options for purchasing your propane–but deciding which option to choose can be confusing, because each option has its own risks and rewards. The option that works best in one year might not work well the next, because the price of propane is unpredictable.
Still, like any major buying decision, it pays to be informed. We’ve prepared a short summary of each option to help you decide what’s best for your family.
- Market Price : Just like stocks on the stock market, the cost of propane fluctuates from day to day with no limit about how high or low it can go. If you buy at market price, you can take advantage of falling prices without having to pay a fee–but if they go up, you’ll have to pay the higher price.
- Fixed Price : Purchasing propane at a fixed rate locks in a price for your fuel throughout the year, no matter what happens in the market (“Pre-buy” is a form of fixed price). This protects you from rising prices, but it also means we can’t lower your price if the market drops. For a fee, you can choose to add downside protection to your Fixed Price plan; with this protection, you’ll pay no more than the fixed price, but if propane prices drop, you pay the lower price.
- Price Cap : Price Cap programs limit how much the price of propane can rise, but not how far it can fall. Propane suppliers charge a fee for Price Cap service because it requires companies to buy insurance from suppliers in case the market price drops; the fee you’re charged covers the cost of that insurance. With today’s propane prices at a historical low, Paraco does not offer a Price Cap option.
As you can see, each plan has its benefits, but also its risks–so choosing the right one for you depends on your tolerance for risk. To summarize:
- If you value predictable bills more than the potential savings you might realize if the market drops, choose a Fixed Plan.
- If you want to manage your own propane purchases and are willing to accept the risk that the price might go up, choose a Market Rate plan.
Still have questions about what plan is right for you? Contact us to learn more