Heating Oil Prices Surge in Northern Ireland
In March, heating oil prices in Northern Ireland increased by a record monthly rate of 92%.
Competition Watchdog Recommends Stricter Regulation
The UK's Competition and Markets Authority (CMA) has recommended that Stormont implement stricter consumer protection regulations for home heating oil suppliers.
The CMA has been investigating the heating oil market in Northern Ireland and other parts of the UK. It found that the significant price spike at the onset of the Iran conflict largely reflected rising wholesale costs and that the market is generally competitive.
However, the CMA concluded that consumers of heating oil are not as well protected as those connected to the gas and electricity grids.
The CMA is not proposing price controls similar to those in the gas and electricity sectors. Instead, it suggests establishing a "new, proportionate regulatory regime" focused on providing consumers with clearer information.
What is the CMA Suggesting?
- Require suppliers to register and meet minimum standards, including transparent pricing and management of order cancellations.
- Mandate suppliers to clearly highlight available payment plans and minimum purchase volumes.
- Create a register for vulnerable households to facilitate their protection.
Industry Needs Stronger Safeguards
Sarah Cardell, Chief Executive of the CMA, said that while the home heating oil market is generally competitive, that is "not enough to ensure good outcomes for all".
"Stronger safeguards are needed – including regulatory oversight and better support for vulnerable consumers as well as communities living in areas of the UK that are particularly exposed to higher and more volatile prices," she added.
Around two thirds of Northern Ireland households use home heating oil, the highest proportion in the UK.
At the start of the United States and Iran conflict in March, heating oil prices in Northern Ireland rose by a record monthly rate of 92%, surpassing the previous largest spike of 59% in March 2022 following the Russian invasion of Ukraine.
Analysis by the CMA indicated that prices increased even more sharply in Scotland and Wales, where heating oil is commonly used in remote rural areas.
The CMA found that prices tend to be lower overall in Northern Ireland due to a competitive range of suppliers and a market size sufficient to minimize delivery costs.
The CMA also praised the daily price checker tool developed by the Northern Ireland Consumer Council and recommended that the Scottish government consider implementing a similar service.
Investigation into Supplier Contract Breaches
Alongside its market study, the CMA has been investigating complaints that some suppliers may have breached contracts by cancelling customer orders at the start of the conflict when prices were rising sharply.
When wholesale prices surged, some suppliers cancelled lower-priced pending orders and required customers to reorder at the new, higher rates.
CMA analysis shows that approximately 1,700 customers across the UK were affected by potential contract breaches.
Although these customers received refunds for their original orders, many had to reorder at significantly higher prices or go without fuel.
As a result, some consumers may have paid between £150 and £350 more for their heating oil orders.
Following engagement by the CMA, some suppliers have agreed to compensate affected consumers, but others have not.
Sarah Cardell stated the CMA was "pressing" the holdout firms to pay compensation and is "preparing to take enforcement action if they don't".
Northern Ireland Oil Industry Responds
David Blevings from the Northern Ireland Oil Federation described the report as "very good news for local home heating oil distributors".
He said it demonstrated that the Northern Ireland market is competitive and that the local oil industry is in "very strong and very good shape".
"Northern Ireland consumers buy their heating oil cheaper than the UK average and up to 15% cheaper than the Republic of Ireland's cost of home heating oil," he added.
"We have more than 200 distributors competing daily for that business and I think the CMA has recognised that in the report."
Blevings noted that the Northern Ireland Oil Federation already maintains a code of conduct but expressed willingness to review and strengthen it if necessary.
Government Response
Stormont's Economy Minister Caoimhe Archibald welcomed the report and stated that the department would continue to engage with the CMA as the work progresses.
"I will consider the CMA's recommendations carefully to ensure any action is proportionate, evidence-based and tailored to the north's specific market and regulatory circumstances," she said.
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