Around 1.5 million households that rely on heating oil to warm their homes are bracing for a difficult winter.
Prices have nearly doubled over the past year following the outbreak of the US-Israeli war with Iran.
The government has pledged to overhaul regulation of the sector, promising tighter rules, greater competition and improved compensation routes for customers when problems arise.
Ministers said they would work with the industry to “develop a regulatory regime for the heating oil market, protecting consumers and promoting competition”.
However, there is no indication that a price cap similar to the one covering standard variable gas and electricity tariffs will be extended to heating oil customers. Nor has any timeline been set for when the new regulations will come into force.
In the interim, discounts on heat pumps have been made available and a code of practice remains in place.
The practice of requiring minimum orders of 500 litres from some customers will also be examined, with the government noting this had forced some people to purchase more fuel than they actually needed.
The Competition and Markets Authority launched an inquiry into the sector and found that 1,700 households had been compelled to place new orders at significantly inflated prices, or go without fuel entirely, after the conflict began. The additional cost to those affected reached as much as £350 per household.
Customers whose orders were cancelled and subsequently repriced were informed they had a right to compensation.
In March, a £53million support package was announced for low-income families dependent on heating oil. Local authorities are responsible for distributing the funds and set their own eligibility criteria.
The government has now confirmed it will act on the CMA’s recommendation to strengthen oversight of the market.
Energy minister Polly Billington said: “Thousands of heating oil customers felt they had nowhere to turn when they paid the price of rising oil and gas costs earlier this year.”
“We won’t accept that. Energy is an essential good and people should not have to think twice about whether they’re protected in the market. That’s why we will reform the sector,” Ms Billington added.
Nick, a 28-year-old heating oil customer from West Suffolk, told the BBC that “off-grid households remain a major policy blind spot” for the government.
Mr Nick rents a three-bedroom property with his partner and said they had been quoted 111p per litre, representing a more than twofold increase in the space of a year.
“Heating my home is now no longer another household bill, but almost an investment,” he said.
He called for tax reductions for customers and for the price cap to be extended to cover heating oil. The charity National Energy Action has made the same demand.
Tim Buckman, chief executive of price comparison website Boiler Juice, told the BBC he supported stronger consumer protections but argued that regulation alone would not address the core issue.
“Just putting regulation in place is not going to reduce the price for customers,” Mr Buckman said. “What we would like to see is the VAT off heating oil or targeting that specifically.”
The cost of heating oil is now twice what it was before the war broke out.
Unlike gas and electricity customers, the 1.5 million households that depend on heating oil do not benefit from equivalent consumer protections. This gap has drawn growing criticism from campaigners and consumer groups.
Ofgem, the energy regulator responsible for setting the cap on standard variable tariffs, currently operates only in England, Wales and Scotland.
It is expected that the regulator will take on oversight of heating oil in those three nations.
Northern Ireland presents a distinct challenge. Some 60 per cent of households there rely on heating oil, making it by far the most common form of home heating. However, regulation in Northern Ireland is handled separately, and the UK government said it would “engage with the Northern Ireland Executive as they consider these recommendations in parallel”.
Meanwhile, the industry body UKIFDA has launched its winter campaign urging customers to act early.
The association has advised households to keep tank levels above 500 litres where possible, service boilers ahead of the cold months and order fuel well in advance rather than waiting until supplies run critically low.
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