Heating Oil Prices NI

According to a May 2012 Report (on Fuel Poverty by the Committee for Social Development) Northern Ireland witnesses 68% of households (a figure which rises to 82% for rural areas) which use heating oil as their primary heating fuel source. In turn, when comparing energy costs overall (on a duel fuel comparison of electricity and heating oil) – it turns out that a Northern Ireland home’s average heating oil/electricity bill is just under £2,300. A figure which compares unfavourably with a similar household on the mainland where the fuel bill just £1,100. In the interests of fairness, however, it should be pointed out that price deflation has been in effect for Northern Ireland in recent times, narrowing the difference between NI and GB. A trend that is predicted to continue.

The report also references the fact that heating oil has seen the greatest price instability over the last two years (in comparison to other heating fuels such as gas or electricity, for example) with almost a 70% increase in cost.

In Northern Ireland, Kerosene is the most commonly used heating product – and wholesale price movements of crude oil account for, according to the Office for Fair Trading, more than 90% of the variation in the point-of-sale consumer price for heating oil. Little more than 8-10% of the cost can be attributed to distribution costs and fuel retailer profits. In other words, 90% of the cost of home heating oil is outside the control of local distributors and consumers.

The OFT’s review into the competitiveness of the UK Energy Market (from October 2011) made clear that Northern Ireland does have a competitive marketplace for heating oil. It pointed out that there were at least 10 fuel retailers/providers in each postcode sector across NI, and went on to say that increased regulation into Northern Ireland’s energy market (i.e. covering energy commodities such as heating oil) would not significantly impact upon (and therefore benefit) the overall cost to consumers. Furthermore, regulation could do no better a job than what consumers could achieve by shopping around for the best / cheapest local deals.

Returning to the Fuel Poverty report, it is estimated that 44% of households in Northern Ireland suffer from fuel poverty. Fuel poverty is defined as where more than 10% of a household’s income is used to pay for energy that heats the home to an ‘adequate’ level of warmth. The 44% figure is the highest in Western Europe. Fuel poverty is rooted, as expected, in the cost of energy, low incomes and energy (in)efficiency.

A number of schemes are currently in place/being trialled to help provide for more flexible payments for home heating oil. Such schemes include DSD’s ‘Pay-as-You-Go’ initiative, oil saving stamps, and novel credit union arrangements where the union contracts and pays the supplier, and the householder then repays the credit union.

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