Reeves Orders Emergency Talks as Heating Oil Prices Double for Rural Households

For one household, the price of 500 litres of heating oil jumped from £314 to £653 in two or three days. As of Monday, the woman identified only as Barrett could not find a supplier in her area at any price. Her experience, stark but not isolated, prompted Chancellor Rachel Reeves to order emergency discussions aimed at protecting the hundreds of thousands of British households that rely on oil rather than gas to heat their homes.

Global crude oil prices reached nearly $120 a barrel this week, a four-year high, driven by fears of prolonged supply disruption following the US-Israeli war with Iran. Unlike gas and electricity consumers, who benefit from Ofgem's price cap, households that heat with oil have no equivalent regulatory protection. Those who store oil in tanks outside their properties are, by definition, among the first to absorb the full force of market shocks.

The consequences have been severe in the communities most dependent on oil. Northern Ireland households are facing an 81% increase in heating oil bills. Some rural homes in England have reported prices doubling. Only 3% of households in England and Wales rely on oil as their sole source of central heating, according to the 2021 census, rising to 5% in Scotland, but the geographic concentration of those households in rural and off-grid areas makes the impact acute.

Reeves told MPs: "I recognise that households who use heating oil face unique challenges, and so I have asked the Financial Secretary to the Treasury to lead discussions with officials and with rural and Northern Irish MPs to explore further action that we can take." Treasury meetings with rural and Northern Ireland MPs are scheduled for Wednesday to consider what steps the government can take.

Energy Secretary Ed Miliband has already moved, warning the chief executive of the UK and Ireland Fuel Distributors Association that the price increases had been "significant" and had "caused concern among households and businesses."

The Competition and Markets Authority issued a blunt statement on its expectations for suppliers: "We know the situation in the Middle East is putting pressure on heating oil prices, and we recognise that this will worry people who may find it hard to afford these extra costs. Generally, we would expect that customers who have placed orders for heating oil should receive it at the agreed price. Suppliers should be clear what they are charging and terms must be fair. We won't hesitate to take action if we suspect that consumer or competition law is being broken." Reeves separately asked the CMA to "be vigilant across prices including essentials like road fuel and heating oil."

The political pressure on the government is mounting. An unnamed critic in the Commons raised the spectre of a repeat of the 2022 energy crisis, questioning whether Reeves might face a bill of £78 billion to support households, as a predecessor claimed to have spent. Reeves pushed back, arguing that the priority at this stage is diplomatic rather than fiscal: "The most important thing we can do at the moment is to de-escalate the conflict and work with Lloyds of London and countries around the world to get those vessels flowing through the Strait of Hormuz."

Whether de-escalation arrives in time to spare off-grid households a winter of unaffordable energy bills is the question Wednesday's meetings will need to begin answering.