A consumer would be paying 43-47 p/L at the beginning of November, and at the beginning of December it had risen to 55-59 p/L. In mid-December the price was around 70-80p/L, on a lead time of two weeks or more.
Do we need regulation on the price of heating oil? Is it right that companies are at liberty to take advantage of customers?
On BBC Radio 4's You and Yours, Tim Yeo (MP, Cons.) put forward his views on the issue. He said that the current prices "don't look fair" and that there were probably a number of suppliers exploiting the situation. This was not acceptable and he was calling for suppliers to operate by a strict voluntary code. Suppliers should also publish wholesale prices.
In response, a spokesman from the Federation of Petroleum Suppliers (FPS) said that the price of kerosene had gone up about 20% to distributors. There were 'exceptional costs' getting fuel out. Drivers were being allowed to work longer hours than the statutory maximum just to get fuel out. In essense, all of this does justify the high price rises. Deliveries are being affected, and even terminals are having trouble getting supplies. Trucks are travelling further to get stocks. On the subject of profiteering, he said that the industry was "highly competitive", and that the majority of areas have half a dozen suppliers or more. He did concede that reported quotations of £2 per litre sounded extraordinary. There were however cases where people wanted to queue-barge, as they were willing to pay more.
Tim Yeo agreed that there were some exceptional delivery costs, for example a bit of overtime etc, but it doesn't add up. He also claimed that there were lots of people without real choice of suppliers.
The Department for Energy and Climate Change (DECC) stated that there is an "open market for heating oil" and that this system gives the best long-term guarantee of best prices. If there are signs of monopolisation or collusion then the competition authorities can take action. The industry as a whole is regulated by the Office of Fair Trading (OFT).
The FPS spokesman went on: "This is a market economy. High demand can cause higher prices." He also explained the flip-side for suppliers: "low demand periods can cause very low profits", for example during summer. "There are no companies making millions of pounds of profit."
Tim Yeo wants to get the OFT to look at this, to see if regulation is required. There are real problems for consumers at a particularly vulnerable time.
What is your opinion? Should the Government intervene across the board, or should profiteering be dealt with on a case by case basis? Are people expecting too much to get their usual tankful during these testing conditions? Add your comment below!