As the price of heating oil tumbles further, falling a staggering 10 per cent since the beginning of the year, the UK’s 1.4 million rural households on oil heating are continuing to benefit.
– Heating oil prices have fallen by 10% since 1 January on top of 29% drop in 2015
– UK’s 1.4 million oil heated households saving hundreds of pounds on annual fuel bills
– As cost remains key driving force, most consumers will stick with oil
For the past two years, oil has remained the cheapest heating fuel for off-grid homeowners with typical annual bills for a three bed house currently around £793 pa (Sutherland Tables, October 2015) – that’s 48.7% cheaper than LPG,
50% less expensive than electric storage heaters and some 24% cheaper than mains gas.
According to online fuel price comparison websites the average recent UK selling price of kerosene is at at the beginning of this week stood at just 26.3 ppl – the lowest point since March 2007 and well over 50% cheaper than when prices peaked in spring 2013.
Unlike gas and electricity, oil users are saving hundreds of pounds as the price drop is being passed on to
consumers. During 2015, the wholesale cost of oil fell by 44% and the average retail cost fell by a substantial 29%.
By comparison, the average wholesale price of mains gas dropped by 34% but consumers only saw their fuel bills cut by a minimal 3%.
With cost remaining a key driving factor for the majority of consumers, it is likely oil will continue to be the fuel of choice for existing users. Low prices could even encourage some of Great Britain’s 171,000 rural homes on LPG and 2.4 million households using electric storage heaters to switch to oil as a much cheaper option.
This is despite the introduction of government incentives to improve energy efficiency in off grid homes such as the domestic Renewable Heat Incentive (RHI) scheme which aims to encourage households to switch to 100% renewable technologies such as heat pumps.
Latest industry figures* show the annual cost of heating an average home with an air source heat pump for example is £1,453 – almost twice that of oil. With such a huge difference in running costs, in addition to the upfront installation costs of between £7,000 and £19,000 for renewable systems, it is not surprising consumers have been reluctant to take up this step.