Save on Home Heating Oil

The 7.7 million U.S. households (5.9 million in the Northeast) that heat with heating oil can expect to pay 32% more this winter over last year, according to the U.S. Energy Information Administration (EIA). That spells an extra $378 tacked onto last year's average bill of $1,199, the EIA estimates.

Before you start shopping for a new home closer to the equator, here are seven ways to keep costs in check.

1. Shop around
Don't merely settle for the company you used last year — make sure you're getting the best price and service. The New York State Consumer Protection Board estimates that prices vary by as much as 20% among competitors in a local market.

How do you find home heating oil providers in your area?

Once you've narrowed down your choices, check to see if there are any outstanding complaints against them, advises Jon Sorensen, spokesman for the New York State Consumer Protection Board. To get this information, contact the Better Business Bureau, or call your local Consumer Protection office.

2. Join a co-op
Fuel-buying groups make deals with retailers to charge members a set amount over the wholesale price. So while prices may still vary throughout the season, your discount is locked in, says Phil Lindsay, oil program manager for the Massachusetts Energy Consumer Alliance. The fuel-buying group, which serves eastern and central Massachusetts, negotiates a fixed-margin price over wholesale for its 8,000 members. Right now, says Lindsay, full-service retailers are offering consumers $2.49 to $2.59 a gallon (cost per gallon will vary by provider), while Mass Energy members are paying $2.25.

Heat USA, a fuel-buying group that serves New York, New Jersey, Connecticut and Rhode Island, estimates that its members are saving between 18 cents and 36 cents off the regular prices of $2.40 to $3.01 per gallon, based on a comparison of prices with full-service companies in the those areas. Based on average home usage (864 gallons per year, according to the Consumer Energy Council of America), that's a savings of $155.52 to $311.04.

Generally, you'll be expected to pay an annual fee, but the price usually includes benefits such as a service contract to keep your furnace in top condition during the winter — and ensures you'll get an emergency repair if it breaks. If your group happens to be a nonprofit, as with the Fuel Buyers Group in New York and others, that "membership contribution" is considered a charitable donation rather than a membership fee. You can deduct the membership contribution from your federal income taxes, but sadly, not your heating oil bills.

Look for a group that ties its prices to the wholesale market, rather than a retailer, warns Consumer Reports. It ensures that the price you're getting is based on the market, not what an individual dealer wants to charge.

Here are a few of the big names:

To search for other fuel-buying groups in your area, check the yellow pages; groups will be listed with other heating-oil suppliers. Can't find a group in your area? Consumer Reports recommends starting your own with neighbors or others in a common group. Then call up oil providers in your area to see what rates and services they would offer for a group of consumers buying collectively.

3. Dig for discounts
Check the usual suspects — any organizations with which you are involved. For example, members of the union group AFL-CIO get discounts through Heat USA. In addition to discounts on full-service fuel oil purchases (estimated savings of $200 to $300 annually), you get a free service contract for your home heating system, $10 off the annual membership fee and 25 gallons of free fuel oil.

You might also qualify for a discount if you are age 55 or older, or have a large oil tank (500 gallons or more).