Government promises heating oil regulation as customers face doubled bills

Heating oil customers across the UK are bracing for another winter of uncertainty. Prices have nearly doubled in the past year, driven by geopolitical upheaval in the Middle East, and the government has now promised to tighten regulation of a sector that has long operated in the shadows of consumer protection law. But the announcement stops short of the safeguard many households are demanding: a price cap like the one that shields electricity and gas customers from the worst market swings.

About 1.5 million households in Britain depend on heating oil, yet they have none of the regulatory oversight that protects those on mains gas and electricity. The Competition and Markets Authority, the UK's competition watchdog, found that when the US-Israeli conflict with Iran sent oil prices climbing earlier this year, some 1,700 households were caught in a brutal squeeze. Their suppliers cancelled existing orders and forced them to buy at sharply higher rates or face running out of fuel. The cost to individual households reached £350. Some customers were told they were entitled to compensation, but the damage was already done.

Energy Minister Polly Billington said the government would not accept this state of affairs. "Thousands of heating oil customers felt they had nowhere to turn when they paid the price of rising oil and gas costs earlier this year," she said. "We won't accept that. Energy is an essential good and people should not have to think twice about whether they're protected in the market." The government has committed to working with industry to develop a new regulatory framework, to promote competition, and to establish clearer compensation routes when things go wrong. It will also review minimum order levels—currently set at 500 litres for some customers, even though domestic tanks typically hold between 1,000 and 2,000 litres—a practice that has forced some households to buy more fuel than they need.

But there is no timeline for when these rules will take effect, and the government has given no indication it will extend the price cap that covers standard variable tariffs in England, Scotland, and Wales to heating oil customers. That is precisely what campaigners and charities like National Energy Action have been calling for. Nick, a 28-year-old renting a three-bedroom home in West Suffolk, told the BBC that off-grid households remain "a major policy blind spot" for government. He and his partner have watched their heating oil quotes climb to 111p per litre—more than double what they paid a year ago. "Heating my home is now no longer another household bill, but almost an investment," he said.

Tim Buckman, chief executive of the price comparison site Boiler Juice, welcomed stronger consumer protections but was blunt about their limits. "Just putting regulation in place is not going to reduce the price for customers," he said. He called instead for the removal of VAT on heating oil or targeted tax relief. The government has already distributed £53 million in support to low-income families who use heating oil through local authorities, though eligibility criteria vary by area. It has also offered discounts on heat pump installations and promoted a code of practice for the industry.

The regulatory picture is further complicated by geography. Ofgem, the energy regulator that sets price caps, has jurisdiction only in England, Wales, and Scotland. Northern Ireland, where 60 percent of households rely on heating oil—a far higher proportion than anywhere else in the UK—operates under a separate regulatory regime. The UK government said it would engage with the Northern Ireland Executive as they consider the new recommendations in parallel. For now, heating oil customers across the country are waiting to see whether promises of reform will translate into real protection, and whether the government will eventually move beyond regulation to the price cap that many believe is the only measure that will truly shield them from market shocks.