Price Protection Programs
What's price protection? In simple terms, price protection protects you from price spikes.
What causes price spikes? We have a simple answer: It doesn't matter what causes a price spike. If it happens and you are not protected, your propane will cost more than you thought it would.
We also have a complicated answer: Pandemics, wars, acts of terrorism, government shutdowns and debt defaults, sudden changes in economic conditions, and decisions made by dictators, oil producing countries and even your elected representatives and bureaucrats in Washington can create market volatility. And let's not forget the impact of cold, wet weather on propane supply.
Customers often ask us what we think is going to happen this winter. And here's our 100%, unqualified answer: We don't know.
Because we don't know (and, for that matter, nobody knows), we recommend that all customers purchase a Price Protection Plan. Unless you have unlimited resources or a large discretionary budget, you really can't afford to not have price protection Click here if you want to see our current market and price protection plan prices.
The following table summarizes some of the key features and terms of our Price Protection Plans:
| Item | Fixed-Price Pre-Buy | Pre-Paid Price Cap | Traditional Price-Cap |
|---|---|---|---|
| Pre-Paid | Yes | Yes | No |
| Coverage Begins* | October 1 | October 1 | October 1 |
| Coverage Ends | March 31 | March 31 | March 31 |
| Program Fee | No | Yes | Yes |
| Refundable | No | No | No |
*We have the option of making deliveries under the Fixed-Price Pre-Buy, Pre-Paid Cap and Price-Cap (for Auto-Fill only) Programs before October 1.
Our enrollment period for Winter 2022-2023 Price Protection programs is open and ends September 2, 2022. Be sure to place your order before September 6, 2023.
Our Price Protection Programs, like all business with us, is subject to our Standard Terms and Conditions. With that in mind, following are frequently asked questions and true/false statements about price protection:
Q: What is price protection?
A: Price protection is a program offered by propane marketers to help provide more predictable pricing to customers and reduce or eliminate the impact of large price spikes.
Q: What kinds of price protection are offered by Caywood Propane?
A: Caywood Propane offers two basic types of price protection: (1) fixed price protection; and (2) price cap protection.
Fixed price protection is just that. Caywood Propane sells propane to customers at a fixed price and delivers propane to the customer at that price during the delivery period. For example, if a customer purchases pre-buy at a $2.15/gallon fixed price, Caywood Propane delivers propane at that fixed price regardless of the market price at the time of delivery.
Price cap protection establishes the maximum amount that a customer will be charged for propane. For example, if a customer purchases a pre-paid cap for $2.25/gallon, Caywood Propane delivers propane at $2.25/gallon or the market price at the time of delivery if the market price is lower.
Q: What is pre-buy?
A: Pre-buy is a price protection program offered at a fixed price. The only way to obtain fixed price price protection from Caywood Propane is to pay for it in advance.
Q: Do I have to pay for a Price Cap in advance?
A: No. A price cap may be pre-paid to obtain a lower cap. However, customers who wish to pay for their propane when it is delivered may purchase a price cap by paying the price-cap fee. The price cap will be higher than the price cap that is pre-purchased.
Q: Will price protection protect me from higher prices?
A: Yes. If market prices exceed the fixed or capped price, you will not pay more than the fixed or capped price.
Q: Will I save money if prices are lower than my price protection price?
A: Yes if you have a pre-paid or traditional price-cap. If market prices are lower than your cap price at the time of delivery you will be charged the market price. The answer is no if you participate in pre-buy at a fixed price. If the market price at the time of delivery is lower than your fixed price, you still will be charged the fixed price (which, of course, has been pre-paid).
Q: Why are price-cap prices higher than fixed price prices?
A: Most propane marketers (but not all), purchase insurance to cover them in the event prices spike. These agreements are called swaps, puts, calls, forwards and futures by Wall Street. On Main Street and at Caywood Propane we call it insurance. The cost of insuring a price-cap is dramatically higher than the cost of insuring a fixed price. It's one reason why many propane retailers do not offer price caps.
Q: Are Price Protection Programs eligible for discounts?
A: Caywood Propane no longer offers discounts. However, customers with legacy Credit Billing (Net-30) house charge accounts pay an additional $0.10/gallon. In addition, customers who place Will-Call orders in person or on the phone pay an additional $0.05/gallon.
True or False: price caps are always better than fixed prices?
False. the pre-buy fixed price is lower than the pre-paid or traditional price caps. So unless the market price remains below the pre-buy fixed price for a sustained period of time, you are better off participating in pre-buy at a fixed price.