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The government is preparing to unveil a support package aimed at helping households cope with a steep increase in heating oil costs. This surge in prices has been driven primarily by geopolitical tensions in the Middle East, specifically the US-Israeli conflict involving Iran, which has pushed crude oil prices above $100 per barrel—up from around $71 per barrel before hostilities escalated.
Prime Minister Sir Keir Starmer is scheduled to announce the new measures, reportedly costing around £50 million, in a press conference on Monday. Alongside this, he is expected to issue a strong warning against companies accused of exploiting the crisis by inflating prices unfairly. Unlike gas and electricity, heating oil prices for consumers are not regulated or capped by Ofgem, leaving oil users vulnerable to rapid price changes.
The issue carries significant weight in Northern Ireland, where approximately two-thirds of homes—around 500,000 in total—depend on heating oil for warmth. In other parts of the UK, heating oil is less common but still used by 3% of households in England and Wales and by about 5% in Scotland. Last week, the shadow business secretary, Reeves, criticized some heating oil suppliers for allegedly using the Middle East situation as a pretext to increase prices excessively, prompting a call for the Competition and Markets Authority (CMA) to investigate.
Responding to these allegations, the UK and Ireland Fuel Distributors Association noted that suppliers have experienced unexpectedly high demand and emphasized their efforts to fulfill orders promptly despite fluctuating prices. The association expressed support for the CMA’s monitoring efforts. Sir Keir Starmer is expected to address reports of canceled orders and inflated costs, emphasizing that legal action will be pursued if any companies are found to have violated the law. Meanwhile, crude oil prices remain volatile following near $120 per barrel peaks last week, primarily due to disruptions at the Strait of Hormuz, a key passageway for global oil shipments.
Gas and electricity prices continue to be protected under the current energy cap in England, Wales, and Scotland, which is enforced by Ofgem. This price ceiling is set to lower bills in April. However, the trajectory of wholesale energy prices through May will heavily influence the cost of household bills from July onwards, with prolonged high prices potentially causing significant increases. Reflecting on previous crises such as the combination of the Covid pandemic and Russia’s invasion of Ukraine, the government had to intervene with schemes like the Energy Price Guarantee to shield consumers. Meanwhile, opposition figures like shadow energy security secretary Claire Coutinho have urged the government to consider plans that immediately reduce energy costs, advocating for direct relief to consumers before seeking further taxpayer support
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