UK Heating Oil: Why Millions Depend On It, What Must Change

Why millions of UK households still depend on heating oil

The UK's gas grid was built out to cover the overwhelming majority of the country, but it was never economical to extend mains gas pipes to every property. Connecting a remote rural home to the grid can cost £10,000 or more, and with low population density spread across a wide area, that cost rarely makes commercial sense for energy companies. The result is that around 4.4 million households across Great Britain, roughly 15% of all domestic properties, remain off the gas grid, according to House of Commons Library analysis of government data. A small share of these are urban properties, particularly high-rise flats where gas connections present a fire risk, but the large majority are rural homes, farmhouses and older properties built before the gas network reached their area.

Heating oil has filled that gap because oil-fired boilers work in much the same way as gas boilers, heating water for radiators and hot taps, but draw fuel from a storage tank refilled by a delivery lorry rather than a pipe. Around 1.5 million of the UK's off-grid households rely on heating oil specifically, making it the single most common off-grid fuel by a wide margin, ahead of electric heating, LPG and solid fuel. Reliance is heaviest in Northern Ireland, where roughly 67% of households use heating oil compared with only around 24% on mains gas, a legacy of Northern Ireland's much less extensive gas network. In Great Britain, off-grid properties are most concentrated in Inner London and the South West, the East of England, and Scotland and Wales.

A regulatory gap that has existed for years

Gas and electricity are delivered through regulated networks, which is why Ofgem oversees pricing rules, supplier conduct, and guarantees access to the Energy Ombudsman if something goes wrong. Heating oil is different: it is a commodity bought directly from private suppliers, more like buying fuel for a car than subscribing to a utility, and it has never fallen under equivalent sector-specific regulation. That distinction made sense when heating oil was simply one option among several, but the CMA's market study concludes it leaves a real gap in practice, with no consistent standard of support for vulnerable customers and no guaranteed independent dispute resolution if a customer cannot resolve a complaint directly with their supplier.

This is not a new problem. Off-grid households have a fuel poverty rate of around 17%, notably higher than the 10.1% rate for households connected to the gas grid, according to DESNZ data, partly because delivered fuels like heating oil are more exposed to price swings than a metered network with price cap protections. The gap became acute during the 2022 energy crisis, when heating oil prices spiked so sharply that government had to step in with an emergency one-off payment, initially £100 and later doubled to £200, specifically to give heating oil households a comparable level of support to those on the price-capped gas network. That payment was a one-off political fix rather than a structural change, which is precisely why the same underlying vulnerability resurfaced in 2026.

What the CMA found in 2026

The CMA launched its market study after conflict in the Middle East disrupted wholesale oil supply, pushing average retail heating oil prices up by as much as 92% at their peak. Average prices rose 64% between February and March 2026, from 64 pence to 104 pence per litre, and peaked at 123 pence per litre in April, before easing by 15% by May, though remaining above pre-conflict levels. Wholesale cost increases accounted for 83% of the retail price rise seen in March 2026, with supplier operating costs adding a further 6%, evidence that the spike was driven by global market conditions rather than supplier profiteering.

A typical 500-litre order cost around £520 in March 2026, roughly £200 more than the same order in February, with around £170 of that increase directly reflecting higher wholesale costs. Around 60% of UK heating oil orders are placed online, and the CMA found most households do have a choice of supplier and access to information to compare prices, concluding that the underlying market structure is generally competitive. The core finding was not that suppliers exploited the crisis, but that the absence of sector-specific regulation left customers with fewer protections than they would have had on a regulated network during the same disruption.

Cancelled orders and compensation

Alongside the market study, the CMA investigated concerns that a small number of heating oil suppliers may have breached their contracts by cancelling customer orders during the crisis. Its analysis identified around 1,700 customers potentially affected by such breaches. Although these customers received refunds for their original order, many were forced to re-order at significantly higher prices or went without fuel altogether, in some cases paying between £150 and £350 more as a result.

Following engagement with the CMA, a number of suppliers have agreed to compensate affected customers, either by covering the difference in price paid for a replacement order or by honouring the original cancelled order at the originally agreed price for customers who did not buy replacement fuel. Not all affected suppliers have agreed to compensate customers voluntarily, and the CMA is continuing to engage with those suppliers while preparing court-based enforcement action against firms that fail to compensate customers voluntarily. This dispute is itself an illustration of the regulatory gap: on a regulated network, customers in this position would have had a clear route to the Energy Ombudsman rather than relying on a competition regulator's case-by-case intervention.

What the CMA is recommending

The CMA has called on the UK government and the Northern Ireland Executive to introduce a new, proportionate regulatory regime for heating oil suppliers. The proposed regime would require suppliers to register and meet minimum standards covering how prices are quoted and how cancellations are handled, and would give households access to independent dispute resolution if they cannot resolve a complaint directly with their supplier. It would also require suppliers to clearly signpost payment plans and minimum purchase volumes, addressing a long-standing complaint that households needing only a small top-up are often forced into large, costly deliveries.

The CMA has separately recommended a review of minimum order volume rules, creation of a register for vulnerable households so suppliers and support services can identify and assist them more easily, and further options for governments to consider, including a new price comparison tool for consumers in Scotland modelled on the home heating oil price checker already run by the Consumer Council for Northern Ireland. It has also flagged the question of whether communities most exposed to high and volatile heating oil prices should be prioritised for transition support to alternative energy sources, connecting this consumer protection question directly to the UK's wider, and repeatedly delayed, off-grid heating decarbonisation policy.

The bigger policy tension: protection now versus transition later

Heating oil sits at the intersection of two government priorities that have not always pulled in the same direction. On one hand, off-grid heating is among the most carbon-intensive ways to heat a home, and government policy has long aimed to phase it out in favour of heat pumps and other low-carbon alternatives. On the other, that transition takes time and money that many off-grid households, who are more likely to be in fuel poverty than those on the gas grid, do not have readily available. The government's own phase-out timeline reflects this tension: an original 2026 target for phasing out new oil and LPG boiler installations in off-grid homes was pushed back to 2035 in September 2023, a nine-year delay that shows how difficult it has been to balance decarbonisation ambition against the practical reality of rural heating.

In the meantime, support for households wanting to move away from heating oil already exists in the form of the Boiler Upgrade Scheme, which offers a £7,500 grant toward eligible air source or ground source heat pumps, though take-up in older, less-insulated rural properties remains limited by the practical cost and disruption of the switch. UK domestic kerosene demand has in fact fallen 31% over the past 27 years, from 3.4 billion litres in 1998 to 2.3 billion litres in 2024, showing a gradual long-term shift away from oil even without a hard phase-out date. The CMA's recommendations do not resolve this tension, but they aim to ensure that for as long as millions of households remain reliant on heating oil, they are not left without meaningful protection while that slower transition plays out.

What heating oil households can do now

Because there is currently no dedicated heating oil regulator or ombudsman, existing protection for heating oil customers comes mainly from general consumer law rather than a sector-specific framework. Contracts for heating oil deliveries are still covered by the Consumer Rights Act 2015 and the Consumer Contracts Regulations, which set requirements around clear pricing, cancellation rights and remedies if a supplier breaches the contract, such as by cancelling a confirmed order without a valid reason. Keeping a written record of order confirmations, prices agreed and delivery dates gives households a stronger position if a dispute arises, since there is no dedicated ombudsman to fall back on if a supplier will not engage directly.

Beyond legal protections, comparing prices before ordering, since around 60% of orders are now placed online, and considering group or community oil-buying schemes, common in many rural areas, can reduce exposure to the kind of price volatility seen in 2026. Households who are already struggling with heating costs, or who fall into a vulnerable category, should not wait for the CMA's proposed vulnerable-persons register to exist before seeking help: local authority welfare schemes, and free advice from Citizens Advice or Trading Standards, remain available now for anyone facing a supplier dispute or unaffordable heating costs, ahead of any new regulatory framework being introduced.

What happens next

The CMA will now work with the UK government, the Northern Ireland Executive, other devolved administrations, regulators and industry to consider and take forward its recommendations, and will continue discussions with suppliers on the proposed compensation scheme for cancelled orders. No timeline has yet been set for when a new regulatory regime might be introduced, and implementation would require government action rather than being something the CMA can mandate directly, meaning the current gap in protection will likely persist for some time yet.

Separately, the CMA has written to suppliers of liquified petroleum gas, another fuel used for heating and cooking by households not connected to the gas grid, to remind them of their existing obligations under consumer protection law. The CMA was clear that no finding has been made against LPG suppliers and it should not be assumed at this stage that any supplier has infringed the law. Further detail on the heating oil market study, including the full evidence base behind these recommendations, is available on the CMA's dedicated case page.

Frequently asked questions

Why doesn't heating oil have the same protections as gas and electricity?

Heating oil is bought directly from private suppliers in bulk rather than delivered through a regulated network like mains gas or electricity, so it falls outside existing energy regulation. The CMA has recommended a new regulatory regime to close this gap, but it has not yet been introduced.

How many UK households rely on heating oil, and why?

Around 1.5 million UK households rely on heating oil, out of roughly 4.4 million households not connected to the mains gas grid. Most are in rural areas where extending gas pipes was never economical, often costing £10,000 or more per property, so heating oil filled the gap left by the gas network.

How much did heating oil prices rise in 2026, and why?

Average prices rose 64% between February and March 2026, and peaked at a 92% increase in April 2026 compared with February levels, driven mainly by wholesale cost rises following conflict in the Middle East. Prices had eased by 15% by May 2026 but remained above pre-conflict levels.

What is the CMA recommending?

The CMA wants the UK government and Northern Ireland Executive to introduce a proportionate regulatory regime requiring heating oil suppliers to register, meet minimum standards on pricing and cancellations, and give customers access to independent dispute resolution, along with a review of minimum order volume rules and a register for vulnerable households.

My heating oil order was cancelled during the crisis, what can I do?

The CMA identified around 1,700 households whose cancelled orders may have breached contract law, and some suppliers have since agreed to compensate affected customers who paid more to re-order. If your supplier has not offered compensation, general consumer contract law still applies, and free advice is available from Citizens Advice or Trading Standards while the CMA continues to engage with suppliers.

Is the government planning to phase out heating oil entirely?

There is a long-term ambition to phase out high-carbon off-grid heating in favour of options like heat pumps, but the target date for phasing out new oil and LPG boiler installations has already been pushed back once, from 2026 to 2035. Existing oil boilers are not being removed, and grants such as the £7,500 Boiler Upgrade Scheme are available for households wanting to switch voluntarily.

Does this affect LPG customers too?

The CMA has separately written to suppliers of liquified petroleum gas to remind them of their existing consumer protection obligations. No finding has been made against LPG suppliers, and it should not be assumed at this stage that any supplier has broken the law.