This morning, when I opened the window, the sky looked like a very thin gray curtain. On days when the clouds are low, I immediately think of the boiler. This year, that thought feels particularly heavy.

These days, the most common question I hear is, "Have you locked in a pre-purchase contract for heating oil?" With news circulating that heating oil prices are expected to rise 34% this winter, everyone seems to be feeling the pressure. So, I decided to check the numbers myself.

The figure of 34% has a source. The U.S. Energy Information Administration (EIA) projected in October that the average price of heating oil from November to March would be $5.26 per gallon, which is 34% higher than last winter.

However, it's important to clarify that the 34% refers to the price per gallon, not that heating bills will increase by 34%.

According to the same projection, the winter expenditure for households using heating oil is expected to rise by 21% to $2,115. The estimated usage is 402 gallons, which is a 9% decrease. This is based on the assumption that the Northeast will be less cold than last winter.

21% is not a small number either. Honestly, I sighed a bit at this point.

So, what is the current market price? According to a weekly survey released by the Maine Department of Energy Resources (DOER) on October 5, the average price of heating oil in the state was $5.97 per gallon.

The average in the Central region was $6.02, with prices ranging from $5.69 to $6.20 within that region. Overall in the state, the lowest price was $5.45, and the highest was $6.81.

The trend this year is even more surprising. In a survey on February 2, the state average was $3.76, but by June 1, it had risen to $4.95, and by August 24, it reached $5.15. Then, at the beginning of October, it became $5.97.

Now, let's talk about pre-purchase contracts. Pre-purchase means setting the price for the oil you'll use in winter ahead of time in the fall. There are usually two types: fixed price and capped price.

A fixed price means you pay the contracted price no matter what. Even if market prices drop, you still pay that price.

A capped price sets a ceiling. If market prices rise, you stop at the cap, and if they drop, you follow the lower price. However, this often comes with a fee as a sort of insurance.

What made me hesitate was the EIA's monthly forecast. It showed heating oil prices starting at $5.79 in November and gradually dropping to $4.84 by March.

Of course, the EIA numbers are national averages, and Maine's prices typically trend higher. Still, looking at the direction, it seemed like we might be near the peak right now.

If that forecast is correct, locking in a fixed price at the current high could lead to losses. Conversely, if supply disruptions in the Middle East continue, prices could spike again. Ultimately, it's a game where no one knows the answer.

For reference, the DOER survey prices are for cash and immediate payment. The data explicitly states that pre-purchase or discounted prices are not included. So, comparing the pre-purchase prices offered by companies to these numbers is the starting point.

Maine also has legal protections for pre-purchase contracts. According to state law (10 M.R.S. § 1110), companies selling pre-purchase contracts must secure at least 75% of their sales volume at a fixed price or have insurance for more than 50% of the prepayments received, or a 100% letter of credit.

Companies must register their intent to sell pre-purchase contracts with the state's Bureau of Financial Regulation by June 30 each year. It's standard to ask about their registration status before signing a contract. If they hesitate in their response, just move on.

There are a few things to definitely check in the contract. Look to see if any remaining gallons at the end of winter are refundable, and whether there are separate delivery fees.

If it's a capped price contract, also check what the fees are. Just keeping track of these three things can significantly reduce the chances of future disputes.

It's also worth comparing with other fuels. According to the same DOER data, when converted to cost per million Btu, heating oil is $43.05, while air-source heat pumps range from $28.72 to $31.36.

Firewood came in at $16.14, and wood pellets at $21.64. Of course, equipment efficiency and installation costs are separate, so you can't just switch based on these numbers alone.

Still, there are definitely more homes around me that are using heat pumps as a supplement to reduce oil consumption. On clear, less cold days, they manage with just the heat pump.

So, what would I do? I wouldn't go for a full fixed price. I believe we might be near the peak price for this year.

Instead, I think it would be more comfortable to lock in a capped price for about half of last winter's usage and buy the rest at market prices as needed. It's a method that may not be perfect but is unlikely to lead to major mistakes.

For those with tight cash flow, a budget plan with monthly equal payments might be better than pre-purchase. This way, you don't have to pay a lump sum all at once.

Call two or three companies to get quotes under the same conditions. This recent survey showed that prices can vary by more than 50 cents per gallon even within the same neighborhood.

This afternoon, the clouds began to clear a bit, revealing patches of blue. I hope the outlook for oil prices opens up a little like that too. Everyone, stay warm and prepare wisely for this winter.