Policy paper: Heating oil: government response to CMA market study

Government response to the CMA market study into the retail supply of heating oil for domestic use in the UK.

The government welcomes the Competition and Markets Authority’s (CMA) detailed study on the home heating oil market in the United Kingdom[footnote 1]. The report provides a vital and timely assessment of a market relied upon by around 1.5 million households across the United Kingdom, many of them in rural and off-gas-grid communities where alternatives can be more limited, and where running out of fuel can have serious consequences.

The conflict in the Middle East has driven up wholesale costs across global energy markets. The government cannot insulate households from every movement in international markets, but it can and will act to protect people from the worst impacts, particularly those least able to absorb sudden price rises.

Heating oil occupies a distinct position within the wider energy system. Unlike gas and electricity, it is not supplied through a continuously connected network or through the licensing framework that underpins the regulated retail energy market. Households typically buy oil in discrete deliveries from distributors, often in large volumes, and prices are closely linked to international kerosene markets, local delivery costs, and regional supply conditions. Under normal conditions, the market has generally been competitive, with many households able to choose between suppliers, and retail prices broadly reflecting wholesale costs.