Government to tighten home heating oil rules but no price cap planned

The government has said it will tighten the rules on home heating oil and make the market more competitive, but it has not announced a price cap for the fuel. The move follows a year in which oil prices have almost doubled and more than one and a half million homes in the UK rely on oil for heating.

Customers who use heating oil do not benefit from the price cap that applies to gas and electricity in England, Scotland and Wales. The government has told reporters it will act, and it is likely that the energy regulator Ofgem will now cover heating oil in Britain. In Northern Ireland, where the highest proportion of homes are heated by oil, there will be a tighter industry code of conduct and changes to allow people to top up in smaller amounts. However, Ofgem does not have a remit in Northern Ireland because energy is devolved. The UK government says it will engage with the Northern Ireland executive as it considers the recommendations in parallel.

In the short term, a strengthened code of conduct will set rules for the industry. Minimum order volumes will also be reviewed so customers can buy smaller amounts if necessary. The government has not yet set out a detailed timeframe.

The impact on households is already severe. In Wiltshire's Nadder Valley, Richard said budgeting for an essential part of heating a home was very difficult when prices had gone up almost to double what he expected. In rural Lincolnshire, villages rely entirely on heating oil because there is no gas. Many residents are on low incomes or retired. One household said they used to fill their oil tank for around 350 to 400 pounds. Now it costs 550 pounds for half a tank. They waited for prices to fall, but they did not, as the war in Iran continued. They have been using oil sparingly and have started using a coal fire again.

Peter and his family are also using coal to heat their home. A £12.50 bag lasts about three evenings in winter. They recently bought 500 litres of oil for £550, nearly double the previous price. Peter said he has to do extra shifts at work to make ends meet.

Donna had an order cancelled by a company. When she rebooked, the price had leapt up. She said she expected some price fluctuations, but not an increase of more than 100 per cent. She said 500 litres of oil bought in summer could go quite a long way, but it will now last maybe three months before she faces the cost again.

In Northamptonshire, neighbours Mark and Martin have joined forces with 100 other residents to buy heating oil as a group. They described the market as being a bit Wild West at times. The barrel price of oil goes up and the next day heating fuel goes up, but when the price goes down it drifts down slowly. A slight dip in June was followed by another rise, and many people have stopped ordering until prices drop.

Consumer complaints have been widespread. Hundreds of people contacted a feedback service to complain about companies cancelling booked orders and then doubling the price. They also raised the jeopardy of deciding when to fill up, and the frustration of facing winter with such high prices.

What is not on the table is a price cap for home heating oil. The proposals focus on clearer consumer protection and better pricing structures, so customers are less likely to get ripped off. They do not include measures to bring down the headline cost of oil. The warm autumn has shielded many households from the need to fill up, but industry and charities have warned that for many a big bill is only a cold snap away.