Profiteering Inquiry into heating oil firms

Heating oil firms have been taken a step further to a full-blown investigation by the Office of Fair Trading, after Charles Hendry (Minister of State for the Department of Energy & Climate Change) called for action.

Heating oil consumer John Knight runs a voluntary scheme for the purchase of heating oil, and orders on average once a month during winter. He found that the price of heating oil had risen so sharply during December, compared to the crude oil market, that parliamentary involvement was required. He wrote to his local MP, Sir Peter Tapsell, who in turn requested a response from Charles Hendry. Charles Hendry's response at the end of 2010 was somewhat muted, stating that "the Government is aware that the increases in heating oil prices experience recently, have been costly for consumers and are a continuing cause for concern." He described how hard things are in the oil supply world, by quoting from the Federation of Petroleum Suppliers (FPS) which appears to be the single source of information for the Government. He believes that "we have an open market for heating oil in the UK and we believe this provides the best long term guarantee of competitive prices for the consumer".

Instead of the Government taking any action, Mr Hendry suggested that Mr Knight approach the OFT (Office of Fair Trading) as it has the power to "investigate allegations of anti-competitive agreements and abuse of a dominant market position". He also pointed out that the OFT has no power to act on rising prices alone, but needs evidence of anti-competitive behaviour.

Now we hear that Mr Hendry has decided after all that the December 2010 price hikes are enough for him to intervene, and to push for a proper assessment of the off-grid energy market. He is expecting conclusions from the OFT in advance of the winter of 2011. This will be cold comfort to everybody who found themselves hit by exorbitant heating oil bills or just unable to afford it, but hopefully they won't be back in the same predicament by the end of the year.

Contacting the OFT

To add to the OFT's body of evidence, submit your own experience. Here is the address:

The Office of Fair Trading
Fleetbank House
2-6 Salisbury Square
London
EC4Y 8JX

Other Parliamentary Material

1) Extract from House of Commons Written Answers 20 January 2011: Energy and Climate Change: Fuel Oil:

The latest figures available show that around 828,000 households in England; 155,000 in Scotland; 143,000 in Wales and 527,000 in Northern Ireland use domestic heating oil as their main heating fuel. These figures are estimated by each devolved Administration from their latest housing and house condition surveys.

Charles Hendry presents the following table of UK expenditure on heating oils by the domestic and non-domestic sector: (figures of £million)

DomesticNon-domestic
Burning oilGas oilBurning oilGas oilFuel oil
2005850504501,57080
20061,030705801,670150
2007950805701,670200
20081,4201107302,350260
20091,020705401,670190

Source:Digest of UK Energy Statistics (DUKES) 2010

Neither the domestic nor the non-domestic data above are able to be split by country. A large proportion of the non-domestic fuel spend shown above will be used for non-heating purposes.

Data from the ONSs Family Spending report suggest that on average for the period 2007-09, households in England spent £0.90/week, in Scotland £1.40/week, in Wales £2.50/week and in Northern Ireland £13.80/week on home fuels excluding gas and electricity.

2) Updated 20 January 2011, a heating oil briefing paper by Louise Smith and Paul Bolton contains 11 pages of summary for the recent situation affecting thousands of people, especially those in fuel poverty, and also comparing domestic oil prices against crude oil prices.


5 Comments

by ben z on 27 January 2011 Reply
just the same as gsw i got oil in sep at 45p then when i rang the beginning of jan was about 80p such a rip off ive just spent the extra money on some electric oil heaters and they are keeping us warm thanks if it doesnt go down again in price ill be changing the whole lot to electric it seems cheaper this way ;-)
by Chris Pomfret on 26 January 2011 Reply
GSW - well done for shopping around but you still paid too much...PLEASE don't ever buy heating OIL on your own ever again, we can help you access cheaper group rates.

Anyway...THE OFT !!!!

IF you ever doubted whether applying pressure still actually worked in our political system against unfair markets and THE corporation...then read below...

...but first Heating OIL (and its unethical pricing structure) is at best a business in desperate need of redesign and at worst one of a series of rural crimes. It is a HUGE rural issue.

...18 months ago I launch a tiny community buying group idea that grew virally and is now a UK wide membership based social and environmental project, saving 1000s of heating OIL buyers huge amounts of money in a unique way that reduces delivery CO2 by upto 90% and does all this in a transparent, easy way. Find us at oilbuying.co.uk

At the beginning of December I wrote to my MP - David Cameron - about a number of issues, including profiteering and market dominance of one company. He wrote to Chris Huhne's DECC and after a month I finally got (via David Cameron)the tepid wishy washy response from Charles Hendry, MP, that suggested everything was as it should be because: "we have an open market for heating oil in the UK and we believe this provides the best long term guarantee of competitive prices for the consumer".

Less than two weeks later a combined effect filling the postbags of rural MPs, the media campaign which was first covered very early in December by local radio BBC Oxford when I went in for a 7am interview, and the pressure from within The House seems to have made Mr Hendry have a rethink!

I have been invited by MPs to put my damning anecdotal evidence to the OFT as part of the inquiry...IF you would like your story to be included email it to me at chris@oilbuying.co.uk - many thanks.

It is as simple as this, the group is going to redesign the way OIL is delivered across this Island and beyond!

by Walter Macqueen on 26 January 2011 Reply
What absolute nonsense are these Govt.comparative figures for oil consumption around the UK/week.

The info.from "ONS's Family Spending,2007-09". "England,90p/week;Scotland,?1.40;Wales ?2.50;N Ireland ?13.80 [What are they burning,gold bricks!}"

No wonder 'our' government makes a hash of many of its programs if these figures are typical of the information the relevant departments rely on.

by neil mason on 25 January 2011 Reply
In my opinion the government turn a blind eye to monopolies like oil companies when they are gaining additional revenue. I understand the domestic 5% rate is capped but 5% of ?500 is considerably more than 5% of ?200 with hundreds of thousands of oil users like myself this must amount to millions of extra revenue!
by John Swindells on 25 January 2011 Reply
Let's see what comes of the OFT inquiry. They get the ball rolling in March.
by GSW on 25 January 2011 Reply
About time, but there are some honest suppliers. I had a 700L delivery in Oct at 45p/p/L. 1st week in early January average price I could get was 78p from genuine independents and boiler juice (standard delivery)was 83ppl! Fortunately another independent (Oakley's) provided at 62p and with 30 days credit. Needs regulating quickly.
by John Swindells on 25 January 2011 Reply
I suppose you were lucky that you had sufficient choice of supplier. Many others were stuck with one or two very expensive quotes, by the sounds of it!

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