A long term solution to heating oil price increases is needed - Jayne Dowle
As autumn is now officially with us, we’ll all be keeping an anxious eye on our energy bills, even more so if we rely on heating oil. The thousands of UK residents with an oil-fired boiler powering heating and hot water are right to question if the government is taking their plight seriously enough.
Ministers have promised to strengthen regulation in the sector, as war in the Middle East has seen heating oil prices double since the start of the year, with some suppliers accused of cashing in and sharp practices.
However, campaigners, including the charity National Energy Action, argue that it is unfair that heating oil is not subject to the same price cap as gas and electricity.
This price cap limits the maximum amount suppliers can charge per unit of gas or electricity, plus the daily standing charge, on regular, variable gas and electricity tariffs. In England and Wales, the average cap is currently £1,723 annually for direct debit customers.
Meanwhile, heating oil customers may already be facing bills of at least double that. What’s worse is that they remain vulnerable to sudden price increases, with no protections in place - totally at the mercy of events in the Gulf.
Heating oil used in the UK and Ireland is kerosene-based. Traded as aviation or jet fuel, about 40 per cent of Europe’s kerosene supply comes from the Middle East.
Around 1.5m households in the UK are reliant on this for keeping warm. Whilst many of these are in rural areas and off-grid villages - including in Yorkshire - there are also recent housing developments built in areas with no access to the gas network. Gradually, electrically-powered heat pumps are taking over from oil tanks in such locations, but this still leaves countless residents facing punishing price fluctuations.
Selby and Kippax MP Keir Maher says 3,870 households in his constituency use heating oil. He’s calling on North Yorkshire Council to introduce a bulk buying scheme, as exists in Scarborough, so residents can benefit from savings by buying oil at lower prices. Locals have been quick to point out that in many areas, people already pool together to help beat down rising costs.
According to the price comparison site Oil Compare, heating oil now costs between 111p and 119 per litre. Filling a typical 500 litre or 1,000 litre tank costs £540-£595, or £1,100-£1,150, plus VAT.
On average, a household uses around 3,000-4,000 litres of heating oil per year, says tank supplier Tanks ‘R’ Us, depending on the size and insulation levels of the home, number of occupants, how high the thermostat is kept and outdoor temperatures. So potentially, that’s a bill for heating and hot water of more than £4,000 a year, an eyewatering figure.
It’s almost double even the highest average annual heating and hot water bill for the largest family homes with at least five bedrooms - currently £2,424 - according to comparison and switching website Uswitch.
The government’s actions have come after the Competition and Markets Authority (CMA) found that 1,700 UK households were forced to “re-order [heating oil] at significantly higher prices or go without fuel” after the war broke out, costing them up to £350.
Customers saw orders cancelled without notice and then found themselves having to re-order, at significantly higher prices - a murky area. With supplies stuck in the Strait of Hormuz, heating oil companies argued that there were indeed shortages, and this led to wholesale prices shooting up, which were then inevitably passed on to customers.
Those whose orders were cancelled and prices raised were told they were entitled to compensation.
The government is accepting the CMA's recommendation to strengthen regulation in the sector through industry body Ofgem. But this is limited; it will apply only in England, Scotland and Wales, not Northern Ireland, where more than half (60 per cent) of households are on oil.
The new regulations will aim to formalise the standards consumers can expect from suppliers, protect vulnerable households from harm, and give people clearer routes to compensation when things go wrong.
However, reform only goes so far. Campaigners want to see equality with the rest of the domestic energy industry and steps taken to make oil more affordable.
In March, the government rustled up £53m in immediate support to help the most vulnerable heating oil customers through the crisis. But six months later, that crisis shows no signs of abating. No-one can control global events, but it is clear that long term and sustainable solutions must be found closer to home.