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UNDERSTANDING PRICE CAPS
 

A price cap protects you from both rising and falling prices. If you are on our SmartPay Plus Cap program, no matter how high world oil prices go, your price won't skyrocket. And if market prices fall, your price comes down too.

There is, however, a fee associated with this protection because it has become very expensive to offer this type of insurance. The price of oil is much more volatile today, on a day-to-day basis, than it was in the past. The cost of the price cap fee is based on this volatility, along with how far in advance we purchase options for a price cap.

This helps explain why the fee we have to charge for our price cap option is higher today than in earlier years. Traditionally, we would buy oil to cover the needs of our customers, and then buy a financial 'hedge' or insurance policy, to protect ourselves if market prices fell below our purchase price. If prices did fall, we would sell back our original supply of oil to our supplier and purchase new oil at the lower price.

In recent years, however, the market has been so volatile-and the risks associated with hedge insurance so great that the price of this insurance has increased dramatically. Therefore, in order to continue to offer our price cap option, we must pass along the cost of the insurance to you in the form of a fee.

 

Customer Testimonials
  • Your price cap program has been a life saver. I can't imagine what I would be paying if you didn't cap my price.
    --Jessica P.
  • We like knowing that our price can go below the cap but can never go higher.
    --Karen and Richard C.
  • I didn't like the price cap fee at first. I said to heck with it and didn't protect my price. But then my price went up more than $1.50 a gallon. I've changed my mind this year. It seems like the price cap fee is worth it.
    --Pierce A.

HB McClure Company
TEL: (717) 232-4328