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Prepay LP For Two Years?

The local COOP is offering a two year contract for LP at $1.09/gal.  Not required, just offered.

What do you think?  Is $1.09/gal a good price for two years, or would you save your money and buy for one year or even just buy on the spot market as you go?

Those of us who remember paying $4.85/gal in January of 2014 find this quite a nice price.

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2 Replies
Honored Advisor

Re: Prepay LP For Two Years?

I guess it depends a lot on whether you are buying with cash, or potentially higher interest rates on operating loans. If that is a price that you are comfortable with in your overall cashflow, does the possibility that it might go down bother you more than the chance that it will go up?

I am not sure sellers honored contracts last time the price went sky-high, though.

Lots of ???. Not a clear answer. Sorry. I do not trust many folks....
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Veteran Contributor

Re: Prepay LP For Two Years?

We can prepay LP for fall right now for .98 per gal. Summer-fill is .94. Assuming your prices are similiar to ours your break-even would be over 1.19 add a few cents for interest, it is still not a bad price for 2 years. Personally, I think oil prices, along with other commodities in general will remain low-so I would go year to year with a contract. Even in 2014 people that contracted their LP for winter didn't get hurt. The wrong thing to do in my opinion on diesel, LP, gasoline is stay open. All it would take some terroist act and prices would sky rocket.

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