Heating oil customers are set to receive compensation after a wave of cancelled orders and price hikes following the US-Israel war with Iran. The Competition Markets Authority (CMA) has announced that around 1,700 households were affected, facing the choice of reordering at significantly higher prices or going without fuel, potentially costing them up to £350. This situation has sparked calls for better protection for these consumers, who are often left without the same safeguards as those connected to the energy grid.
The CMA's investigation revealed that while wholesale oil prices surged from around $70 a barrel to nearly $120 a barrel by the end of March due to the conflict, UK heating oil prices mirrored this increase, with average retail prices reaching a peak 92% higher. However, the CMA concluded that suppliers did not materially profit from the crisis, as the price hikes largely reflected rising wholesale costs.
Despite this, the CMA has recommended new regulations to protect customers, including clearer pricing practices and better support for vulnerable consumers. Chancellor Rachel Reeves expressed concern over the lack of protection for these households, indicating a potential review of existing regulations. The UK and Ireland Fuel Distribution Association (UKIFDA) acknowledged the issue, stating that they would work with government bodies to address the recommendations.
The CMA's approach has been supported by Anthony Maines, a 31-year-old from Seaton Delaval in Northumberland, who paid £463.83 for 700 litres of heating oil in February. His order was cancelled due to the conflict, forcing him to reorder at a higher price. Maines felt penalised for his foresight, as he had predicted the war would cause prices to rise.
The CMA has not disclosed the number of suppliers agreeing to compensate customers or the exact payout details. However, it has indicated that those who paid more to replace their cancelled orders will receive a payment covering the difference, while those who did not buy replacement oil will have their original orders honoured at the agreed price. Legal action is also being prepared against firms that fail to voluntarily compensate customers.
This incident highlights the vulnerability of heating oil customers, who often store fuel in tanks outside their properties and are among the first to feel the impact of price fluctuations. With approximately 1.5 million households relying on heating oil, the CMA's report underscores the need for improved consumer protections, especially in Northern Ireland where 60% of households depend on this fuel source.
