Yesterday night, one of the local TV stations had a news item on customers who had locked in their home heating oil prices last summer. Unfortunately for these consumers, the price of a barrel of oil and, hence, the price of a gallon of heating oil, have come down. So the customers are sitting on contracts obliging them to pay $.50 - $.70 a gallon MORE than the current price.
I'm not sure if we were supposed to feel bad for those who had locked-in. And certainly, I would have felt more sympathy if the couple profiled had been living in some ancient, uninsulated, innercity house covered in asbestos tiling - rather than in a new suburban mega-mock-Colonial. But I really couldn't see the point of the piece. (Or maybe I just didn't agree with the point of the piece.)
In her defense, the reporter did note that the local oil company had also locked in to the higher price in its futures contract, so there wasn't much they could do without taking a bath, but she also urged consumers who'd signed up earlier in the year, when they thought fuel prices would be rising, to call their heating oil companies and see what they could do for them.
But let's face it. If the price of oil had skyrocketed, those who had locked into contracts at a lower price would be gloating and high-fiving all over the place, congratulating themselves on how shrewd they were. They gambled and they "lost", but unlike a wager in which they had to put money down, they really haven't lost any money. They just have to live by an agreement they made that was presumably based on a price they could afford to pay.
It's interesting that people who realize that they are "risking" $2 when they place a bet on a pony - or $1 when they buy a MegaMillions ticket, or drop a $10 roll of quarters in the Foxwood slots in about 15 seconds - don't "get" (or somehow can't accept) that they're assuming risk when they lock in on a future price (based on a volatile commodity). When they sign up for a balloon payment mortgage (based on the assumption that housing prices only go in one direction). When they put all their retirement savings in Enron stock (ditto on the stock market).
Everyone seems to get the reward part of the equation. I really don't understand why the downside comes as a shock. I do feel bad for people who gambled and lost, and I hope that next time they'll think twice. But all the squawking when the rewards don't quite pan out really makes me crazy.
2 comments:
Maureen,
I agree, it's a downside to our "entitlement" society. Sometimes, we've got to accept sh** happens and move on.
That said, I do feel badly for (some of) the people that got sucked into ridiculous things like a "reverse amortization" mortgage. Sure, they should have known better, but young people just starting out don't have the hard-nosed "sh** happens" experience and they're endlessly optimistic that they'll make mo' money, move up and continue to do well.
It can be a fine line between "buyer beware" and predatory sucker traps.
Mary - I'm with you on clamping down on the "predatory sucker traps" which deliberately fail to disclose information on risk, or flat-out lie to those who are too eager, inexperienced, and naive to realize that they're being conned.
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