Starmer to set out support plan for heating oil costs

Plans to support households who have faced a sharp rise in the cost of heating oil are to be set out by the government.

The price of heating oil has spiked since the outbreak of the US-Israeli war with Iran, as the cost of crude oil has jumped above $100 (£75) a barrel - it was $71 a barrel before the conflict began.

Prime Minister Sir Keir Starmer will set out the support plans - reportedly costing £50m - at a news conference on Monday. He is also expected to say he will "not tolerate companies trying to exploit this crisis" following accusations of price gouging.

Unlike consumers who use gas and electricity for heating and hot water, prices for households using heating oil are not capped by regulator Ofgem.

The issue is particularly acute in Northern Ireland, where about 500,000 homes use it, almost two-thirds of all households.

About 3% of households in England and Wales said oil was their only source of central heating, according to a 2021 census, and 5% of households in Scotland.

Last week, Reeves said some heating oil companies were using the Middle East crisis as "an opportunity to rip off consumers" and asked the Competition and Markets Authority (CMA) to look into the issue.

In response, the UK and Ireland Fuel Distributors Association, which represents heating oil suppliers, said its members had seen "a very large and unexpected increase in demand".

"We have spoken to many distributors who, despite the very large price swings and demand, are honouring orders as quickly as they can. We know that the CMA is monitoring this, and we support this approach."

Sir Keir is expected to raise concerns on Monday about reports of cancelled orders and prices being pushed up.

"If the companies have broken the law, there will be legal action," he is expected to say.

Last week, the price of crude hit nearly $120-a-barrel before slipping back. On Friday it ended the day close to $104 a barrel, but that is still much higher than where it was before the conflict began.

Prices have spiked mainly due to the effective closure of the Strait of Hormuz, a vital waterway that carries a fifth of global oil supplies.

For now, household gas and electricity bills in England, Wales and Scotland are protected by the energy cap, which is set by the regulator Ofgem. Under this cap, bills will fall in April.

However, what happens from now until late May on the wholesale energy market will determine what happens to household bills from July. A sustained period of high wholesale costs could mean a sharp increase in energy prices for millions.

The last time there was a particular spike, following Covid and Russia's invasion of Ukraine, the government had to step in to help with the Energy Price Guarantee.

Speaking on the same programme, shadow energy security secretary Claire Coutinho called on the government to implement the "cheap power plan" the Conservatives outlined last year to reduce bills immediately.

Coutinho said the "first port of call should be to reduce costs" to people's energy bills, "before we go to the taxpayer again".