The government will soon announce plans to help households struggling with rising heating oil costs.
Heating oil prices have gone up sharply since the conflict between the US, Israel and Iran started. Because of this crisis the global price of oil has risen to over $100 per barrel compared to about $71 per barrel before the conflict began. Over the weekend Chancellor Rachel Reeves said she had found the money to provide support for households. Prime Minister Keir Starmer will explain the support package at a press conference on Monday. The plan is expected to cost around £50 million.
The Prime Minister will also warn energy companies not to take advantage of the crisis. He will say that the government will not tolerate companies exploiting the situation after customers accused some suppliers of increasing prices. Unlike gas and electricity prices, the regulator Ofgem does not control heating oil prices. This means households that rely on heating oil have felt the impact of rising oil prices more quickly. Some people say their heating costs have doubled. Know More
This problem is especially serious in Northern Ireland, where about 500,000 homes use heating oil. That’s two-thirds of all households in the region. 3% Of homes in England and Wales rely entirely on oil for central heating while around 5% of households in Scotland do the same. Week Reeves accused some heating oil companies of using the crisis to rip off consumers. She asked the Competition and Markets Authority (CMA) to investigate.
The UK and Ireland Fuel Distributors Association said its members have had an increase in demand. The association added that many suppliers are trying to fulfill orders quickly as possible despite the rapid price changes. It supports the CMAs decision to monitor the market. The head of the CMA Sarah Cardell confirmed that the regulator is urgently examining the situation. It will take action if any companies are found to have broken the law. Read More
Starmer will also raise concerns about reports that some companies have cancelled orders and suddenly increased prices. He will warn that the government will take legal action if companies break the law. Recently, oil prices reached $120 per barrel before dropping slightly. On Friday the price closed at around $104 per barrel which’s still much higher than before the conflict started.
The price has gone up mainly because the Strait of Hormuz a shipping route has effectively been closed. This route transports one-fifth of the worlds oil supply. For now, the energy price cap set by Ofgem protects gas and electricity bills in England, Wales, and Scotland. Under this cap, bills will fall in April. However energy prices after July will depend on what happens in the energy market over the next few months. If energy costs stay high for a time millions of households could see their bills increase again.
During the major price spike the government introduced the Energy Price Guarantee to help people manage their bills. Energy Secretary Ed Miliband said the government is ready to step in if necessary.. Any decision will depend on how much the current crisis affects energy prices. Conservative politician Claire Coutinho argued that the government should first focus on reducing energy costs. She thinks they should not rely on taxpayer-funded support again.
