Heating oil customers are set to receive compensation following a wave of cancelled orders and price hikes during the US-Israel war with Iran, according to the Competition Markets Authority (CMA). This decision comes after an investigation revealed that approximately 1,700 households were forced to re-order at significantly higher prices or go without fuel, potentially costing them up to £350. The CMA's findings highlight a stark contrast in consumer protections between heating oil customers and those connected to the energy grid.
The CMA's investigation uncovered 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 lack of robust consumer protections for heating oil customers remains a concern.
The CMA has recommended new regulations to address how prices are quoted and cancellations are handled, emphasizing the need for better support for vulnerable consumers. Chancellor Rachel Reeves expressed her concern over the lack of protection for these households, indicating a potential re-evaluation of consumer rights in this sector. The UK and Ireland Fuel Distribution Association (UKIFDA) has acknowledged the issue, committing to work with government bodies on the recommended changes.
While the CMA has not disclosed the number of suppliers agreeing to compensate customers, the affected customers will receive payments covering the difference between the original and higher prices they paid for replacement orders. Those who did not buy replacement oil will have their original orders honoured at the agreed price. The CMA is also preparing to take court-based enforcement action against firms that fail to voluntarily compensate customers.
This incident underscores 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, primarily in Northern Ireland, the CMA's report highlights the need for improved consumer protections and market regulations to safeguard these consumers from future disruptions and price volatility.
