Market Price, Prebuy & Price Cap: What’s The Difference?

Written on: June 10, 2021

online account wisconsinLakes Gas offers several options for purchasing your propane – but deciding which option to choose can be confusing because each option has its own pros and cons. The option that works best in one year might not work well the next because the price of propane is unpredictable.

Still, like any major buying decision, it pays to be informed. We’ve prepared a short summary of each option to help you decide what’s best for your family.

Market Price

Just like stocks on the stock market, the cost of propane fluctuates from day to day with no limit how high or low it can go. If you buy your fuel as you go, at this market price, you can take advantage of falling prices without having to pay a fee.

Prebuy

Purchasing propane in advance of heating season at a fixed rate locks in a price on all the gallons you pay for regardless of when they’re delivered and no matter what happens in the market (“Prebuy” is a type of fixed price). This option protects you from rising prices, but it also means we can’t lower your price if the market drops (learn more about the terms of our Prebuy option here).

Price Cap

Price Cap programs limit how much the price of propane can rise, but not how far it can fall. Propane suppliers charge a fee for Price Cap service because it requires us to buy insurance from our own suppliers in case the market price drops; the fee you’re charged covers the cost of that insurance.

Summing up

As you can see, each price option has its benefits and risks, which makes choosing an option a matter of personal choice. To summarize:

Still have questions about what pricing option is best for you? Contact the pros at Lakes Gas to learn more about propane delivery options in WI and MN!