The UK's heating oil market has been beset by a perfect storm of factors, leading to price hikes of up to 92% for thousands of households between February and March this year. As wholesale oil prices skyrocketed from approximately $70 to almost $120 a barrel, due in part to the US-Israel conflict with Iran disrupting energy transportation and production, many UK consumers were left facing significantly higher costs or cancelled orders. In fact, some 1,700 households incurred additional costs of up to £350.
According to data from the Competition and Markets Authority (CMA), which conducted a four-month investigation into the matter, price increases for heating oil largely reflected rising wholesale costs. However, the watchdog highlighted significant disparities in consumer protection between those connected to the national gas and electricity grids and those relying on heating oil. The CMA has recommended new regulations to address these issues, including enhanced support for vulnerable consumers.
As a result of the CMA's findings, several suppliers have agreed to compensate affected customers. For those who paid more to replace a cancelled order, payments will cover the difference in cost. Customers who did not purchase replacement oil will have their original orders honoured at the agreed price. While the exact number of suppliers or customers involved remains undisclosed, the CMA has confirmed it is preparing to initiate court-based enforcement action against firms that do not voluntarily compensate their customers.
These developments take on added significance for the 1.5 million UK households that depend on heating oil, particularly in Northern Ireland where 60% of households rely on this fuel source. The impact of fluctuating global energy prices on these households can be severe, given many store oil in outdoor tanks and are often among the first to feel the effects of price increases.
Chancellor Rachel Reeves has expressed her concern over the lack of protection for heating oil customers, stating that the government will "look very seriously at what can be done" in response to the CMA's findings. The UK and Ireland Fuel Distribution Association (UKIFDA), representing heating oil suppliers, acknowledges a "small number of cases" require redress and has pledged to collaborate with government bodies on the report's recommendations.