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Home heating oil price drops - time to stock up?

Heating flames

Oil prices are at their lowest in 20 years. While this may be bad news for industry, with the threat that 30,000 oil and gas jobs could be lost to Coronavirus, for households that use home heating oil it’s cutting their fuel spending by as much as 75%.

Get reliable, up-to-date informationNow, more than ever, it’s important to get access to reliable information. For information about COVID-19, see the gov.uk website, and for how it affects the energy industry get the most reliable updates from Ofgem.

Homes with boilers fuelled by home heating oil are common in rural areas of the UK, where they’re often not connected to the mains gas supply - a total of around 1.5 million UK homes are heated using oil as fuel.

What is the current price of home heating oil?

The price of home heating oil per litre fell below 20p in recent weeks. When you consider that as recently as January it was at 54 pence per litre, this represents a huge drop in a matter of months.

It will come as no surprise, then, that many customers are even buying spare tanks in which to keep extra fuel for stockpiling. With the price of oil likely to go back up as the global lockdown over the COVID-19 pandemic eases, industry experts encourage those who heat their homes in this way to take advantage.

Andrew Cooper, commercial manager for Certas, one of the largest heating oil producers in Wales, said that home heating oil is “one of the highest expenditures for anybody throughout the year” but that some customers were anticipating a 75% saving on their normal spending.

“I would certainly fill up the tanks,” Mr Cooper says, “but ensure the security measures are in place. With everybody buying fuel, there is the threat of theft with people knowing they are full." It’s also important, of course, that you keep any oil you’re planning on stockpiling stored safely and securely.

It's refreshing in uncertain and difficult times that there is some positive news” - Andrew Cooper, Certas

LPG users not seeing the benefit

Those who heat their homes using liquid petroleum gas (LPG) central heating, which is delivered to houses in tanks or bottles at regular intervals, have not been paying less as a result of the drop in oil prices.

A representative for Oftec, a trade organisation for the heating and cooking industries, says that this is “because they are locked into longer-term contracts.” He did add, however, that LPG users may see some savings if prices stay low:

As they renew their contracts, they'll get a better deal if the LPG suppliers think prices are likely to stay low for a period. - Malcolm Farrow, Oftec’s Head of Communications

Unfortunately, there usually isn’t the possibility of customers switching to get a better deal, as he explains: “With LPG, particularly if you've got a larger tank, it's usually owned by the supplier, so changing supplier is not quite so straightforward."

Petrol prices drop - but is it a fair deal?

As many of you may already have noticed, the fall in the global demand for oil has also forced down petrol prices, but the AA has said it thinks drivers are being ripped off by petrol companies.

It says that the extent of the drop in global oil prices is not reflected in the savings we’re seeing at the pump. The price of a litre of unleaded petrol has dropped from 127p in January to 107p but should be down to a pound.

The average pump price is higher because retailers say they need to charge 10p a litre more to offset the lower volumes of fuel they are selling.” - Luke Bosdet, the AA’s fuel spokesperson

Volumes of petrol sales are indeed down by up to 85% in some areas, and whereas large supermarkets can afford to keep their prices low and take a small margin of profit, it’s true that independent petrol stations would struggle if forced to bring prices down.

It’s true that you could save up to a fiver per tank by filling up at a supermarket now, as in many prices have dropped to close to a pound, but spare a thought before you do to independent sellers who have struggled due to drops in demand in recent months.

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