August 1 Update

After attending the Dept of Energy conference in Washington DC in early April, we were disturbed by the information. Lehman Brothers predicted a big drop in prices in early 2009 due to 2 million/bbl (barrels) a day of new oil coming on the market. Meanwhile, speculators had already jacked up the price of oil to ridiculous levels by mid April and close to $5.00/gallon by July. There was a disconnect between supply, demand and price. While demand has decreased for many consecutive months, prices continued to increase.

We felt that committing members to the usual pre buy offer could result in disaster if the price of oil dropped below cash prices as it did slightly in 2006. But here we saw the potential for a much larger drop, perhaps 60? to 90? per gallon from locked in pre buys to actual cash price in winter.

For the first time in nine years, we've adopted an approach familiar to commercial users called "Rack Plus" ; the simplest definition is ?landed? (Wholesale Cost) + (plus) freight + (plus) an (agreed upon) "administrative cost" for the dealer. These prices vary every day, depending upon wholesale cost. OTEA will receive the ?Rack Plus? prices from every company we work with, every day and beginning in September will post them on the Web. But the simplest way to know you are getting a good deal is this; compare your Rack Plus delivery price to the cash price of Eastern or Irving or other companies. If you still have questions AFTER visiting this Website, you may call us at 603.776.5322. Rack Plus is a brand new concept for Irving residential CSRs. They HAVE NOT been trained in it. Do not call them for an explanation. Eastern & Lavallee reps are familiar with the concept.

We were concerned whether we predicted this year correctly. But the $26 drop in crude oil per bbl in the last two weeks and the steady continuing drop has confirmed that we chose the correct course and that perhaps the speculator bubble is on its way to bursting. Oil for September delivery has dropped from a high of $4.20/gallon to $3.32 gallon today, a drop of 88%. Oil for January, 2009 delivery has dropped from a high of $4.32/gallon to $3.44/gallon today (88%). We feel "Rack Plus" will save you a great deal of money in the early Fall and Spring and average out in the deep winter.

If we did a pre buy today, it would be about $3.93/gal. Those who locked in at $4.59 and more will be disappointed. if prices drop further, we may do a pre-buy. BUT we will recommend that you pre buy no more than half your annual needs for the deep winter and use Rack Plus for the rest. The decision will be yours, IF we decide oil drops enough to warrant a pre buy.