Heating oil protection calls after 'shock' price rises

There are calls for thousands of rural Scottish households that rely on heating oil to warm their homes to get better protection against "shock spikes" in costs.

The US-Israel war with Iran saw oil prices soar at the start of March.

About 130,000 Scottish households use heating oil and average costs in Scotland rose from 67.92p per litre on 28 February - the day US and Israel launched attacks on Iran - to 147p per litre by 8 March.

David Watson, of Kyle of Sutherland Development Trust, said his area of the Highlands was particularly badly affected due to the high numbers of older people. He said: "These global shocks can impact really quickly on people."

UK Energy Secretary Michael Shanks said there were regulations in place through the Competitions and Markets Authority (CMA), and added that further investigations of costs would be done if necessary.

Heating oil does not have the same protection that is offered to some household gas and electricity bills through a price cap set by energy regulator Ofgem.

Prices are influenced by Europe's jet aircraft fuel market because it is a kerosene-based product.

Heating oil is also mostly supplied by refineries in the Middle East where fighting has disrupted production and exports.

Watson said prices were two to three times what they were before the conflict.

"One of the biggest issues for people is the cost of a minimum fill," he said.

"If people have got an empty tank they have to be able to afford to get the oil out to them in the first place."

He added: "We have longer winters here and a higher proportion of older people.

"It's just spring and we could still have another two or three months of cold snaps, so when these shocks hit they hit hard and people worry about heating their homes."

End Fuel Poverty Coalition said rural households were already facing the "deepest fuel poverty".

Coordinator Simon Francis said: "The cost of heating is already high and the price of improving these homes to make them warmer and more efficient is often higher than average.

"That means these households are even more exposed to sudden global price shocks driven by volatile fossil fuel markets and profiteering energy companies."

Francis said the long-term answer was moving away from dependence on fossil fuels and greater use of alternative heating sources such as heat pumps and heat networks.

Highland Fuels, one of Scotland's suppliers of heating oil, said it was experiencing "significant changes" in customer demand across Scotland.

A spokesperson said: "We are aware that the recent developments in the Middle East are creating understandable concerns around fuel supply and pricing.

"Like others across the fuel oil industry, we have seen an increase in inquiries from customers wishing to discuss their heating oil requirements."

The spokesperson said because heating oil and jet aircraft fuel were both kerosene-based products the wholesale market was largely influenced by the jet fuel market in Europe.

They added: "With heightened tensions in the Middle East and Europe's reliance on jet fuel supplies linked to the region, wholesale prices are currently moving rapidly.

"In response to these market conditions, we are having to review and adjust sales pricing for customers more frequently than usual."

Highland Fuels said some customers may experience slightly longer response times from its team, and it thanked customers for their trust and patience.

It said fuel distribution association, UKIFDA, had published consumer guidance on heating oil price movements.

Energy Secretary Michael Shanks said the UK government was closely monitoring heating oil prices.

"We will continue to do so and we are in close contact with the CMA who regulate this space," he told BBC Scotland News.

"If there is further action we need to take we will take it."

Shanks said the UK government had been "very clear" that there should not be price gouging - increases by sellers higher than what is considered fair.

He added: "First and foremost consumers should get the protections they are entitled to."

MPs are due to meet the UK Chancellor Rachel Reeves on costs later.

Ahead of the gathering, Seamus Logan, SNP MP for Aberdeenshire North and Moray East, told BBC Radio Scotland Breakfast one of his constituents had seen their bill rise from 62p per litre to 145p per litre, and was on a two-week waiting list for a delivery.

Alistair Carmichael, Liberal Democrat MP for Orkney and Shetland, said consumers had faced similar cost rises after the Ukraine war started in 2022.

"People need help in the here and now," he said.

Harriet Cross, Conservative MP for Gordon and Buchan, said she had written to the CMA asking for an investigation into price increases.

Even in 'normal' times, using oil is one of the most expensive ways to heat our homes.

And it's also among the most environmentally damaging since the kerosene is essentially highly concentrated jet fuel.

But outside urban areas, it's long been the only choice other than electricity.

In the short term, there's probably little that can be done other than targeting those who are "price gouging" in the hope that it dissuades others.

In the longer term, air source heat pumps might be the more reliable alternative where the cost of electricity to power the heat exchangers is regulated.

To work effectively, properties need to be well insulated but that also applies to all homes that don't want to burn money unnecessarily.

Analysis shows that while the savings from switching are marginal for gas users, those whose heating is fuelled by oil can save significantly.

There is a pot of money available to help homeowners with the installation costs but it's finite and demand for heat pumps is growing.

Environmental groups will hope that this second price shock in five years might be enough to convince more people to make the move.

But heat pumps are also becoming a political football in this election year with some parties suggesting the country can't afford to change everyone's heating when times are tough.