PM to set out support plan for heating oil costs

Support plans for households facing a sharp increase in the price of fuel oil must be defined by the government.

The price of fuel oil has soared since the start of the US-Israeli war with Iran, with the price of crude oil jumping above $100 (£75) a barrel – it was $71 a barrel before the conflict began.

This weekend, Chancellor Rachel Reeves told The Times she had “found the money” to help.

Prime Minister Sir Keir Starmer will outline the support plans – which would cost £50 million – at a press conference on Monday. He is also expected to say he “will not tolerate companies trying to exploit this crisis” following accusations of price gouging.

Unlike consumers who use gas and electricity for heating and hot water, prices for households using oil are not capped by regulator Ofgem.

As a result, those who use heating oil have been among the first to feel the impact of rising crude prices and some customers say their costs have doubled.

The problem is particularly acute in Northern Ireland, where around 500,000 households use it, almost two thirds of all households.

Around 3% of households in England and Wales said oil was their only source of central heating, according to a 2021 census, and 5% of households in Scotland.

Last week, Reeves said some heating oil companies were using the Middle East crisis as “an opportunity to rip off consumers” and called on the Competition and Markets Authority (CMA) to look into the matter.

In response, the UK and Ireland Fuel Distributors Association, which represents domestic heating oil suppliers, said its members had seen “a very significant and unexpected increase in demand”.

“We have spoken to many distributors who, despite very wide price variations and demand, are fulfilling orders as quickly as possible. We know that the CMA is monitoring the situation and we support this approach.”

On Saturday, CMA president Sarah Cardel said she was urgently investigating these issues and “would not hesitate to take enforcement action if potential violations were identified.”

Sir Keir is expected to raise concerns on Monday over reports of canceled orders and price rises.

“If companies have broken the law, legal action will be taken,” he is expected to declare.

Last week, the price of crude reached nearly $120 a barrel before falling again. On Friday, it ended the day at nearly $104 per barrel, but that figure remains much higher than before the conflict began.

Prices have soared mainly because of the effective closure of the Strait of Hormuz, a vital waterway that carries a fifth of the world’s oil reserves.

For now, household gas and electricity bills in England, Wales and Scotland are protected by the energy cap set by regulator Ofgem. Under this ceiling, bills will drop in April.

However, what happens between now and the end of May in the wholesale energy market will determine what happens to household bills from July onwards. A prolonged period of high wholesale costs could lead to a sharp increase in energy prices for millions of people.

The last time there was a particular spike, after Covid and Russia’s invasion of Ukraine, the government had to step in to help with energy price guarantees.

Energy Secretary Ed Miliband told the BBC’s Laura Kuenssberg show on Sunday that “if there is a need to intervene, we will” on energy bills. However, he added, any intervention would depend on the scale of the impact of the conflict.

Speaking on the same programme, shadow energy security secretary Claire Coutinho called on the government to implement the “cheap energy plan” the Conservatives presented last year to immediately reduce bills.

Coutinho said that “the first step should be to reduce the costs” of citizens’ energy bills, “before turning to the taxpayer again.”