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Chancellor Rachel Reeves is preparing to introduce a support package for households facing higher heating oil costs, a consequence of the global repercussions stemming from the US-Israel conflict in Iran. In a recent interview with the Times, Reeves confirmed that funding has been secured to assist those most impacted and that the Treasury is exploring various measures to shield vulnerable groups from rising energy expenses.
The surge in global oil prices has particularly affected heating oil, widely used in rural locations lacking access to the main gas network. Unlike gas and electricity, heating oil prices are not regulated by Ofgem’s energy price cap, which is anticipated to decrease in April. The government plans to unveil its support measures in the early part of next week. A government spokesperson emphasized that Reeves will make the necessary decisions to balance helping families with the cost-of-living pressures while safeguarding public finances.
Approximately 1.7 million households across England and Wales rely on kerosene for heating and hot water. Since prices for these fuels are unregulated, they are vulnerable to sharp fluctuations. Reeves remarked to the Times, “We’ve worked through with MPs and others a response for people who are not protected by the energy price cap.” Regarding gas and electricity bills, she indicated that the government is considering “different scenarios” in preparation for the next price cap adjustment in July, aiming to implement more “targeted options.”
Although Ofgem has announced that household energy bills will drop by 7% in April due to government reforms, prices remain around one-third higher than before the conflict in Ukraine began, and the number of consumers struggling with bill debts has increased significantly. With ongoing turmoil in the Middle East, energy costs may rise sharply from July when the price cap is expected to be lifted, driven by higher wholesale gas prices.
The chancellor’s statements followed a recent meeting with petrol retailers addressing the spike in oil prices, which has pushed fuel costs to their highest level in 18 months. The Petrol Retailers Association rejected accusations of “price gouging” made by ministers and even threatened to pull out of talks. Energy Secretary Ed Miliband expressed significant concerns about market behavior, noting that the Competition and Markets Authority had previously raised issues. He revealed that discussions with the CMA earlier in the week focused on both heating oil and motor fuels. Additionally, Miliband confirmed that the planned increase in fuel duty, currently frozen, is now under review. Meanwhile, Conservative leader Kemi Badenoch has urged Reeves to cancel the fuel duty hike and called for renewed efforts to expand North Sea oil drilling
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