Heating oil price spike leaves households and suppliers out of pocket
Bill payers and business owners across the UK are grappling with rising costs as conflict erupts in the Middle East causing heating oil prices to soar.
Around 1.5 million homes in the UK use heating oil but a surge in global oil trade has caused prices to rise by as much as £100 in the past week alone.
Almost two-thirds (62.5 per cent) of homes in Northern Ireland use oil for heating; The UK average is just over five per cent.
Andy Douglas founded Andy’s Oil in 2013 and has been supplying heating oil to customers in County Armagh for over a decade. He says rising prices and panic buying forced him to stop taking orders for a short time and he had to operate at a loss.
Mr. Douglas told Independent: “I’m working 16 hours today and I’m losing £1,000 because I didn’t charge enough a day or two before when I accepted the order.”
The oil salesman, who has been in business since 2003, says he has increased his normal margin of between 3p and 12p per litre.
“[But] “My suppliers have increased their prices to me by 30p per liter,” he says, “so I am delivering this at a fraction of what I could deliver.”
According to Consumer Council NI (CCNI) figures, the average price of 500 liters of home heating oil in Northern Ireland just before the conflict was £307.38.
On Monday the figure rose to £395 at one provider in County Armagh and £425 at another in County Down.
Mr Douglas said: “Normally I lift my oil from Belfast storage terminals on a daily basis. I’ll go and fill the lorry, go out and sell the oil, that’s it. So I’m tied to the daily prices coming out of the storage terminal, no matter what.”
“This works most of the time, except when there is panic buying.”
The business owner adds that Russia “has been through this before” at the start of its war with Ukraine in 2022, causing energy prices to spike in the UK before returning to consistently higher levels.
With that recent experience, “everybody knew how to jump in and buy oil before the price went up,” Mr. Douglas said, adding that he received about 200 to 300 phone calls on Monday.
Unlike homes powered by grid-supplied electricity and gas at standard variable or default tariffs, prices for those using heating oil are not regulated by Ofgem’s energy price cap.
This means they are entirely subject to the fluctuating price of heating oil, which is expected to rise further in price as the conflict in the Middle East intensifies.
Global oil prices continue to rise after the attacks on Iran by the USA and Israel on Saturday. This was followed by Iran’s retaliatory attacks on targets in the United Arab Emirates (UAE), Qatar, Bahrain, Jordan and Iraq.
As the conflict escalated, Iran warned that it would “set fire” to any ships attempting to pass through the Strait of Hormuz, a key shipping channel for the global oil industry.
The strait provides the only passage from the Persian Gulf to the open ocean, making it a crucial point for the functioning of the oil industry. Approximately 20 percent of the world’s gas and oil is transported by water.
Some accused oil importers of increasing their costs prematurely in anticipation of further delays between the start of the conflict and price increases.
Irish Labor Party spokesman George Lawlor TD called on the Government to immediately impose a maximum price order on home heating oil.
He said: “What we are witnessing is pure price gouging. Home heating oil companies increased their prices overnight, blaming events in the Middle East, yet the oil now being delivered to Irish homes has been in the country for weeks, if not months.
“There was no sudden interruption in supply. There is no shortage. There is no justification for victimizing families in this way.”
Raymond Gormley, Head of Energy Policy at the Consumer Council, said: “As we import all of our home heating fuel, Northern Ireland is at the mercy of volatile global oil markets and the price consumers pay is affected by a complex range of factors, including geopolitical tensions that can lead to price fluctuations.
“Home heating oil prices have been slowly rising over the last few weeks, with 500 liters costing £307.38 on 26 February, up £13 on the previous week.
“This dispute with Iran is very likely to have some impact on home heating oil prices in Northern Ireland and we will know exactly how much impact this will have when we publish our weekly oil price check on Thursday. We will continue to monitor the situation very carefully.”
