What is a Price Protection Program?

Wall Street calls them hedges and then gives them specific names like futures, calls, puts, collars and swaps. On main street and at Caywood Propane we call them what they are: Price Protection Programs. These propgrams protect you from large fluctuations in propane prices. During the winter of 2014, for example, the average price of propane in Michigan spiked to $3.18/gallon; it had been $1.99 at the same time the year before. Customers who participated in our Price Protection Program that year paid $1.68.

What are the kinds of Price Protection Programs?

We have two kinds of Price Protection Programs:

Fixed Price: You pay us $1.49/gallon plus sales tax and we deliver propane to you at that price until April 30 or when you run out of Fixed Price gallons, whichever comes first.

Market Capped Price: You are charged the lower of our Market Price or the Capped Price at the time of delivery. For example, if the your Market Price is $0.99 and the Capped Price is $1.69, you pay $0.99 plus sales tax. However, if our Market Price is $1.79 and the Capped Price is $1.69, you pay $1.69 plus sales tax. We will deliver propane to you under this program until April 30 or when you run out of Market Capped gallons, whichever comes first.

When do I pay for these programs?

Fixed Price: Payment is due at the time you sign up for the Fixed Price Program. The minimum purchase is 500 gallons. The purchase period typically runs from about July 1 until the end of August. The Fixed Price for winter 2019-2020 is $1.49/gallon plus sales tax. Prices are subject to change until you sign up for the program.

Market Capped Price: There are three ways to pay for this Program:

  • Leased Tank: If you lease a tank from us participation in the Market Capped Program is complementary. Just pay for the gas plus tax under the credit terms that apply to you. The Market Capped Price for winter 2019-2020 is $1.69/gallon plus sales tax.
  • Pre-Pay: Payment is due at the time you sign up for the Market Capped Program. The minimum purchase is 500 gallons. The purchase period typically runs from about July 1 until the and of August. The pre-pay Market Capped Price for winter 2019-2020 is $1.59/gallon. Prices are subject to change until you sign up for the program.
  • Coverage Fee: You pay a non-refundable coverage fee of $0.10 per gallon at the time you sign up. The minimum purchase is 500 gallons. The purchase period typically runs from about July 1 until the end of August. The Market Capped Price for this program is $1.69/gallon. The Capped Price is subject to change until you sign up for the program.

When does the 2019-2020 winter sign-up period begin?

The sign-up period begins now and runs through August 31.