Fixed-Price Diesel Contracts: How Locking In a Diesel Price Works
A fixed price gives you a fuel cost that holds for the term. It doesn't give you a lower price. Here's how these contracts are built, what they cost you when the market falls, and what to ask before you sign.
A fixed-price diesel contract sets one price per gallon for an agreed volume and term. FuelGo prices them off NYMEX NY Harbor ULSD futures. If the market rises, your price holds. If it falls, you still pay the fixed price. You're buying budget certainty, not guaranteed savings, and you usually commit to a volume.
How a fixed price diesel contract works
On floating or index pricing, your price per gallon moves with the wholesale market, usually resetting daily at the rack (see how a delivered diesel price is set). On a fixed price, the price per gallon is agreed once and holds for the gallons and months in the contract. In practice it works in five steps:
- You size the volume. Work out gallons by month and by delivery location from your fuel records. For equipment and generators without good history, the generator fuel calculator gives a starting estimate. Connecticut's consumer protection agency gives heating oil buyers the same first step: know your tank capacity and how much you use in an average year, so you don't buy too much.
- The supplier prices it off the futures. FuelGo prices fixed-price diesel off NYMEX NY Harbor ULSD futures. The futures price for each delivery month is the base. On top of it come the costs of getting fuel from that benchmark to your tank: the gap between your local market and New York Harbor, freight, delivery and the supplier's margin.
- You accept, and the price is set. Futures trade through the day, so a fixed-price quote reflects the market when it was priced. Ask how long it's good for.
- The supplier carries the price risk. Once your price is fixed, a rise in diesel lands on the supplier, not you. One standard way to manage that is what the CFTC calls a buying (or long) hedge: futures bought to protect against possible increases in the cost of a commodity.
- Deliveries run as normal. Each drop is invoiced at the fixed price, plus taxes if they're billed separately, until the contracted gallons or the term run out.
Why fixed diesel prices are built on NY Harbor ULSD futures
NYMEX NY Harbor ULSD futures (code HO) are a widely used benchmark for U.S. diesel and heating oil, with a public price for each month ahead. One contract is 42,000 gallons (1,000 barrels), quoted in dollars and cents per gallon and physically delivered in New York Harbor. Monthly contracts are listed for the current year and the next three calendar years, and each month stops trading on the last business day of the month before delivery (CME Group). Our diesel price report explains spot, futures and retail prices side by side. Three things about the benchmark show up in your quote:
- You don't need a futures account. A single contract is 42,000 gallons, and futures accounts are marked to market every trading day, with gains and losses applied to the account balance (CFTC). A fixed-price supply contract turns the benchmark into a price per gallon on your own deliveries, in your own volumes.
- Later months don't cost the same as this month. When futures prices are lower in later delivery months, the market is in backwardation. When they're higher, it's in contango (CFTC). A 12-month fixed price is built from the prices for those months, so it can come in above or below today's price. Neither tells you where the market will actually go.
- New York Harbor isn't your yard. The CFTC calls the difference between a local cash price and the nearby futures price the basis, and it moves. A fixed delivered price has to cover it, which is one reason quotes differ from one location to the next.
Fixed price vs. index, cap and collar: how the structures compare
"Fixed price" is one of several ways to price a diesel supply contract. The others share the risk differently between you and the supplier.
| Structure | How the price is set | If diesel rises | If diesel falls | The catch |
|---|---|---|---|---|
| Floating (rack) | Moves with the terminal price, usually daily | You pay more | You pay less | No budget certainty |
| Index + differential | A published price, such as an OPIS rack average, plus a margin agreed up front | You pay more | You pay less | The margin is fixed, the fuel isn't. You can check the price against the index. |
| Fixed price | One price per gallon for set gallons and a set term | Your price holds | Your price holds, so you can pay above market | Volume commitment. The supplier's hedging cost, margin and risk are inside the price. |
| Cap (ceiling) | Floating price with a maximum | Stops at the cap | Falls with the market, fully or partly | Caps often carry an upfront premium or set-up fee. Read what happens below the cap. |
| Collar | Floating between a ceiling and a floor | Stops at the ceiling | Stops at the floor | The floor cuts or removes the premium, but gives back savings below it. |
| Lock-in over futures | You choose when to lock the futures price; a fixed adder goes on top | Locked gallons hold | Locked gallons hold | You pick the timing, which is a market call. |
Cap and collar mechanics from the Transportation Research Board's TCRP Report 156 fuel purchasing guidebook. Massachusetts' statewide heating oil contract (ENE52) used both index + differential pricing and a fixed adder over NYMEX that buyers locked with their vendor.
Two details are easy to miss. Massachusetts warns heating oil buyers that some cap contracts let you pay the lower market price when prices fall below the cap, while others keep you at the cap. And the TRB guidebook notes that structuring a collar or a similar combination of options reduces or eliminates the premium on a cap. FuelGo quotes fixed-price diesel, and OPIS-based or indexed pricing for buyers who'd rather float. For broader supply agreement terms (force majeure, quality, delivery schedules), see fuel supply agreements.
The trade-offThe honest trade-off: what a fixed diesel price costs you
2026 shows both sides. EIA's U.S. average for on-highway diesel was $3.459 a gallon in the week of January 12 and $6.529 in the week of September 21. Two weeks later, in the week of October 5, it was $6.199. A buyer who fixed a price early in the year was well under the street by September. One who fixed at the September high was paying above it by October. Retail averages aren't contract prices, but the lesson holds: nobody knew the turn in advance.
It's happened before. The Topeka transit authority locked in a diesel contract in May 2008. Prices fell that August, and the agency ended up spending $215,000 more over eight months (METRO Magazine).
A fuel cost that holds
- Budget certainty. A fuel line that doesn't move for the term.
- Protection from a spike in the middle of a job, a contract year or a budget cycle.
- A number you can use in a bid, a budget or a board approval.
The downside, in writing
- Savings when prices fall. You still pay the fixed price.
- Flexibility. You commit to a volume, and a shortfall can cost you.
- A share of the price. The supplier's hedging cost, margin and risk are built in, so a fixed quote won't simply equal today's index price.
- An easy exit. Massachusetts warns that some fuel contracts charge a termination fee if you end early.
- Supplier risk. Forward contracts carry default risk for each party; exchange futures are guaranteed by the clearing organization (CFTC). Your price is only as good as the supplier behind it.
You don't have to fix every gallon. The TRB guidebook treats the share of fuel you protect as its own decision, separate from how far ahead and when. Cleveland's transit authority (GCRTA) hedged 90% of its fuel in 2009, because "your situation may change, and then you might end up being over-hedged." Fixing the gallons you're sure to burn and floating the rest limits the cost of a shortfall.
Who a fixed-price diesel contract suits, and who it doesn't
Steady burn, fixed revenue
- Contractors bidding fixed-price work. Fuel is priced into the bid, so a fuel price that holds keeps the margin from moving with the market. See construction fuel delivery.
- Fleets with fixed rates and no fuel surcharge to recover a spike.
- Public agencies and institutions working to an annual budget. See government fuel delivery.
- Predictable use: yard fleets, long-running jobs, prime power and other loads you can forecast month by month.
Uncertain volume, or costs you already pass on
- Volume you can't predict, like standby generators that may run 5 hours or 500 this year. Generator fueling on demand or a keep-full schedule fits that better.
- Fuel you already pass through. If customers pay a fuel surcharge or a price adjustment tied to a published index, a fixed fuel price can leave you paying the fixed price while what you recover falls with the index. Federal contracts can carry exactly that clause: FAR 16.203-1 describes fixed-price contracts with economic price adjustment based on published prices or cost indexes.
- A bet on direction. Fixing because you think prices will rise is a forecast. Decide on how much a spike would hurt you, not on a market call.
Terms to ask about before you lock in a diesel price
- What's in the price. Benchmark, local differential, freight, delivery fee and any additive. One all-in number per gallon, or separate lines?
- Taxes. Inside the fixed price, or billed on top at the rate in effect? Massachusetts' statewide heating oil contract required per-gallon taxes and fees as separate invoice lines. Tax rates can change mid-term: Ohio suspended its 47-cent state diesel tax from October 4, 2026 to January 2, 2027. Current rates are in diesel taxes by state.
- Volume. Total gallons, monthly minimum and maximum, and which sites and products count toward it.
- Shortfall. If you use less, do you pay for the unused gallons, take them anyway, roll them into later months, or settle the difference against the market? Massachusetts' statewide contract let buyers roll purchases into additional months.
- Overage. Gallons above the contract: at the fixed price, at market, or at index plus a differential?
- Term. When the price starts and ends, and what pricing applies when it ends.
- Product. Dyed or clear, biodiesel blend or R99, and whether the fixed price covers the switch to winter fuel.
- Delivery. Locations, delivery format (wet-hose, tank wagon or transport load), the minimum per drop, and any after-hours or emergency charges.
- Early exit. A flat fee, or the difference between your price and the market on the gallons left?
- Credit and the supplier. Prepayment, deposit or credit terms, and how payment is due. Massachusetts tells buyers to ask whether a dealer honored its fixed-price contracts in past winters. That's a fair question for any supplier.
This guide explains how fixed-price fuel contracts generally work. It isn't financial, investment, hedging, legal or tax advice, and it isn't a forecast of diesel prices. Have your finance team, attorney or advisor review any contract before you sign it.
Fixed-price diesel from FuelGo
FuelGo offers fixed-price diesel contracts priced off NYMEX NY Harbor ULSD futures, and OPIS-based or indexed pricing (a published terminal price plus a margin agreed up front) for buyers who'd rather float. The fuel arrives the same way under either: wet-hose fleet fueling, on-site delivery of 20 to 4,400 gallons per drop into tanks, generators and equipment, or transport loads up to 7,500 gallons. We deliver dyed off-road diesel, clear on-road diesel, gasoline, DEF and R99 renewable diesel nationwide.
Ask dispatch for a fixed-price quote for your volume and delivery locations. Compare it with floating prices in the diesel price report, and work out what fuel really costs your fleet with the fleet fueling cost calculator. Dispatch runs 24/7/365, and we take credit card, ACH or check. Get a fixed-price quote or call 800-720-4546; a dispatcher replies within the hour.
Common questionsFixed-price diesel contract FAQ
What is a fixed-price diesel contract?
How do I lock in a diesel price for my business?
What happens if diesel prices fall after I lock in?
Do I have to use all the gallons in a fixed-price contract?
What's the difference between a fixed price and a price cap?
Why are fixed diesel prices based on NY Harbor ULSD futures?
Are taxes included in a fixed diesel price?
Is now a good time to lock in a diesel price?
Sources: CME Group, NY Harbor ULSD futures contract specs · CME Group SER-7823, NY Harbor ULSD futures (Rulebook Chapter 150) · CFTC glossary: hedger, buying hedge, basis, backwardation, contango, forward contract, counterparty risk, mark-to-market · TRB, TCRP Report 156: Guidebook for Evaluating Fuel Purchasing Strategies for Public Transit Agencies (2012) · METRO Magazine, transit fuel hedging sees winners, losers (Apr. 21, 2009) · Massachusetts statewide contract ENE52 user guide (heating oil) · Massachusetts, heating oil contracts guide · Connecticut DCP, consumer alert on heating oil contracts (Sept. 22, 2026) · FAR 16.203-1, fixed-price contracts with economic price adjustment · U.S. EIA, Gasoline and Diesel Fuel Update (weekly U.S. on-highway diesel, 2026)