Heating Oil Price Guide
As a business that has supplied heating oil for almost 100 years, we get asked a lot of questions about heating fuel prices which is why we have put together this heating oil price guide.
Many queries involve issues such as why the price varies so much throughout the year, and how best to keep your heating system running efficiently. If there is anything you need to know about heating oil prices, oil-fired boilers, tank security or a whole host of other topics, we’re confident you’ll find it here.
Why Heating Fuel Prices Change
One question heating oil suppliers are asked regularly is why heating fuel prices vary so much over a year. If you’ve followed domestic fuel prices, you may even have identified reoccurring patterns over time.
But what factors affect oil prices? Why do domestic heating oil prices change, and what are the factors affecting supply of oil? And most importantly, what can you do get the best possible heating fuel prices?
What Factors Affect Oil Prices?
There are three main factors that affect kerosene prices; the price of crude oil, seasonality, and supply and demand.
These factors are interdependent: as one changes, so do the others, which can exasperate fluctuations in central heating oil prices or help stabilise them.
Crude Oil and Domestic Fuel Prices
The price of crude oil is the single most significant determinant of home heating fuel prices in the UK. It is dependent on two things; global supply and demand and market sentiment. But what are the factors affecting supply of oil?
Supply and demand are at the mercy of many factors including the weather, economic and political events, wars and conflicts, and the amount of oil produced by the members of Organisation of Petroleum Exporting Countries (OPEC). These can change on an hourly basis, affecting global supply and demand and buffeting the price in one direction or another. This makes producing an accurate domestic heating oil price forecast incredibly difficult. But there is an extra dimension to this: market sentiment. Market sentiment is best described as what oil traders believe about the future demand for oil.
If they believe demand will grow, thereby pushing up the price of oil, they buy up futures contracts (these are agreements to buy a set amount of oil on a set day for a fixed price) intending to sell these contracts at a higher price once that demand has been realised. If they believe demand will drop, they will sell the futures contracts they hold before the price plummets.
The problem with this is that mere belief will lead to traders buying futures and driving up the price of crude oil. As a result, the cost of heating oil in the UK will rise whether the perceived hike in demand for oil was real or not.
The opposite is also true. The belief there will be a reduction in demand for oil will cause speculators to sell futures, and the price of kerosene will fall.
This is how global supply and demand and market sentiment combine to have a far-reaching effect on your heating oil quote here in the UK, and why even the best heating oil price forecast can be wrong.
How Seasonality influences Heating Fuel Prices
In the UK, demand for central heating oil is highest from October to March, as these are the coldest months. This increase in demand puts a strain on supply, and as a result, the cost of heating oil goes up.
In the summertime, when demand is at its lowest, the price goes down, so although it might sound counterintuitive to buy winter fuel during in the hottest months, it can lead to the best deals.
But it isn’t just simply supply and demand that has a bearing on your heating oil quote; local competition can also come into play.
Where there are many local companies in a market place, some heating oil suppliers will try to undercut their competitors.
However, beware that a penny or two off the price per litre of kerosene has to be recovered elsewhere in the business, often leading to slow delivery times and poor customer service.
Tips on How to Get the Cheapest Domestic Fuel Prices
Spending money on heating oil is not everyone’s idea of fun, so taking steps to minimise your bill is essential. There are several things you can do to help you get the best heating fuel prices, which can add up to a significant saving on your annual energy spend.
Buy Heating Oil When Demand is Low
One strategy that will help you access the lowest heating oil prices is to buy when demand is low. In the UK, this is between April and September.
As we discussed earlier, kerosene prices are cyclical, rising in the winter and dropping back in the warmer months. Therefore, buying in the summer can significantly reduce your annual heating oil bill.
But it’s not just getting the best price for heating oil that makes topping up in summer a great idea. Delivery is quicker, and, because you’re not competing with the winter hoards, you can usually choose a time convenient to you. And if you’re worried about the fuel deteriorating, don’t be. Stored safely in a secure oil tank, home heating oil will easily last until winter.
Avoid Emergency Heating Oil Deliveries
Wherever possible, keep your oil tank topped up to avoid the need for an emergency heating oil delivery. An emergency oil delivery will be costly because it comes at the time of most demand. And it’s the time when fuel suppliers are working their hardest to fulfil heating oil orders.
This means you might not get your emergency oil delivery in time, leaving you without heat when you need it most.
Reduce your Heating Oil Quote with an Oil Club
Another great way to reduce the price of heating oil per litre is to join, or even form, a heating oil club.
Heating oil clubs are popular in villages and other areas where a high number of residents use kerosene as their primary source of fuel.
By combining their individual fuel requirements into one order, each member benefits from a reduction in the kerosene price per litre due to bulk buying. This can lead to worthwhile savings, particularly when ordering in the summertime.
Rix Petroleum serves a number of heating oil clubs across the UK and as an extra reward for purchasing from us, we donate the savings we make on reduced transportation costs towards community projects. These can run to hundreds of pounds and so far, we’ve funded new school clothing, a church renovation project, local sports teams and a wealth of other great causes.
Energy Efficient Boilers Reduce the Cost of Heating Oil
Maximising the efficiency of your oil heating system is a great way to keep your energy bills down. The great news is that oil-fired boilers can be extremely efficient with many A-rated models on the market. So, if you’re considering buying a new one, choose the most efficient you can afford.
Boiler replacement costs do vary, with a new oil combi-boiler priced anywhere from around £500 to more than £2,000. This might sound a lot, but many manufacturers offer a monthly payment plan, making spreading the oil-boiler replacement cost easy.
To ensure continued efficient heating, an annual oil boiler service is essential. Oil boiler insurance is a great way of protecting yourself in the case of emergency breakdowns, so will give you peace of mind.
When having your oil boiler serviced or repaired, ensure the company you choose is OFTEC registered, as this is a guarantee of high-quality work. Read our energy saving tips for more ways to save!
Heating Oil Monthly Payment Plan
Many central heating oil suppliers offer monthly payment plans that enable you to spread the cost of your fuel over the course of the year. This is one of the best ways to avoid a large bill when you need to top up your tank.
Caring for your Heating Oil Tank
Looking after your oil tank is fundamental to ensuring your oil-fired heating system operates efficiently. This is because your oil tank is subject to everything the British weather can throw at it, 24 hours a day, seven days a week. Without maintenance, things can go wrong.
As part of an oil tank maintenance plan, you can carry out general checks yourself. This should include looking for signs of exterior damage such as rust, dents, cracks, bulges or discolouration. Check for signs or smells of a leak and if you detect any, call an OFTEC-registered oil boiler engineer.
Check the oil gauge is working because if it’s not, you might have a blockage somewhere, or the indicator could be faulty.
Check the condition of the fuel as contaminated fuel can create real problems for your heating system. If it looks contaminated, call in a professional as your tank will need cleaning out.
Finally, regardless of whether your fuel appears contaminated or not, have your tank professionally cleaned out every few years. This will reduce the prospect of water damage, particulate build-up or microbial growth which can deteriorate your fuel. Having your oil tank professionally cleaned is also the best way to prevent major leaks, which can result in a substantial financial cost and serious environmental damage.
Oil Tank Security: Preventing Heating Oil Theft
As the temperatures fall, oil thieves become more active. According to official Police figures, you’re most likely to fall victim to oil thieves in the first three months of the year as people feel the pinch after Christmas, but the cold weather drags on.
This is why having effective oil tank security in place is essential.
This can be achieved by:
- Siting your tank where prying eyes cannot see it.
- Consider using an oil cage as this creates a physical barrier for would-be thieves.
- Securing the lid of your tank with a high-quality, sturdy oil tank lock.
- Installing security lighting overlooking your heating oil tank.
- Consider installing CCTV overlooking your heating oil tank.
- Planting prickly plants around your container such as thorns and brambles, as not only are these a deterrent, they can trap evidence such as blood and clothing samples.
- Regularly checking your heating oil gauge as a sudden drop might mean you’ve been the victim of a theft.
- Fitting a loud tank alarm.
- Laying a gravel path up to your heating oil tank, as this is very noisy underfoot.
Also, it is a good idea to take out oil tank insurance as this will cover any damage to the tank or pipes. Do not rely on home and contents insurance as this rarely covers theft of heating oil or damage to your oil tank.
Always Choose an FPS Accredited Supplier
When it comes to keeping your loved ones warm, don’t leave anything to chance. Always select an FPS (Federation of Petroleum Suppliers) accredited company to supply your domestic heating oil.
The FPS is the trade organisation for the oil distribution industry, and accredited companies must abide by a strict code of practice or risk have their accredited status withdrawn.
Rix Petroleum is an FPS accredited business and complies with all FPS regulations.