Glossary termNo. 7 / 10
- Category
- Dealers & contracts
- Fuel
- Heating oil
- Source
- MA DOER / R.I. Gen. Laws
A price-protection contract that sets a maximum ("ceiling") price per gallon you'll pay, while still letting your price drop if the market softens. To offer it, the dealer hedges with options and charges you a non-refundable fee — a per-gallon premium or a flat enrollment charge.
The catch: you only come out ahead if prices fall far enough to beat that fee; if they stay at the cap, you've paid for insurance you never used.