Fixed, capped or index fuel pricing: how to choose
Rack-plus, cost-plus, retail-minus and fixed-price contracts for fleets, and pre-buy plans for homes, compared.
Whether you buy diesel for a fleet or heating oil for a house, you choose how much price risk to keep. Every fuel contract is a version of three ideas.
Index pricing
You pay a published benchmark plus or minus a fixed margin. Fleets buying at the terminal see rack-plus pricing (the terminal’s posted rack price plus a delivery and margin adder). Fuel cards often use cost-plus (the station’s cost plus a fee) or retail-minus (the pump price less a discount). You carry the market risk but can see exactly what you pay over the benchmark.
Fixed price
A set price for a set volume over a set period. Homeowners know it as a pre-buy. It removes price risk for the gallons covered, but you lose if prices fall, and there are usually penalties if you use less than you committed.
Capped price
A ceiling with the right to pay less if the market falls, at a premium per gallon. It works like insurance.
How to decide
- How much would a 50¢ or $1 move hurt your budget? Use the fleet fuel budget scenarios.
- Is your volume predictable? Fixed contracts punish overestimates.
- Can you pass fuel costs on? Carriers with surcharges can live with index pricing; a fixed-price service business may want a hedge.
- Watch the leading signals on the markets page: wholesale prices and crack spreads move before retail.
Shippers paying carriers’ fuel surcharges face the mirror-image question; see how shippers negotiate fuel surcharges.