The move comes as instability in the Middle East pushes energy prices higher worldwide. While gas and electricity bills in Britain are regulated through Ofgem’s price cap, heating oil falls outside that system, leaving households exposed to sudden market swings. The Treasury is now considering targeted assistance to address what ministers describe as a growing cost-of-living pressure.
Rural Households Face Steep Heating Oil Costs
An estimated 1.7 million homes in England and Wales depend on heating oil for heating and hot water, often because they are not connected to the national gas grid. The fuel, usually delivered as kerosene and stored in tanks on private properties, must typically be purchased in bulk. This means households often have to pay hundreds of pounds at once when their supply runs out.
According to government officials speaking to The Times, the absence of price regulation has made these homes particularly vulnerable to sudden spikes in global oil markets. Heating oil is not included in Ofgem’s energy price cap, which protects consumers using gas and electricity from extreme price fluctuations.
Treasury sources say this creates a distinct financial challenge for households reliant on oil heating. When the tank is empty, families must purchase a full delivery regardless of market conditions. A government source told The Times that the chancellor intends to offer targeted support because households in this situation cannot spread costs through monthly payments in the same way as gas or electricity customers.
The issue is especially acute in rural areas. In Northern Ireland, for example, about 62.5 per cent of homes rely on heating oil, according to figures cited by BBC News. The reliance on oil has meant that recent volatility in global energy markets has translated rapidly into higher household expenses.
War-Driven Energy Volatility Raises Wider Concerns
The pressure on heating oil users comes amid broader uncertainty in global energy markets. The surge in oil prices has been linked to the escalating conflict in the Middle East, which has disrupted expectations around supply and pushed crude prices to their highest levels in more than a year.
Households that use heating oil have already seen significant increases in costs. Some have reported bills doubling in a short period, while others have faced cancelled orders or difficulty securing deliveries. These developments have heightened concern within government that rural households may face particular hardship if energy markets remain volatile.
Rachel Reeves told The Times that the Treasury is examining several policy responses to protect vulnerable households from rising energy costs. She said ministers have been working with MPs to develop a response for people not covered by the existing energy price cap.
At the same time, the government is reviewing wider energy price pressures. According to Ofgem, the price cap for gas and electricity is expected to fall by about 7 per cent in April following changes to energy charges. Yet bills remain roughly a third higher than they were before Russia’s invasion of Ukraine, leaving many households still under financial strain.
Officials are now modelling different scenarios for the coming months. The next review of the energy price cap is due in July, and the Treasury has indicated that additional support options may be considered if rising wholesale prices begin to feed through into household bills again.
