Around 1.5 million UK households relying on heating oil need stronger consumer protections after prices surged by as much as 92%, the Competition and Markets Authority has said.
The watchdog launched a market study after conflict in the Middle East disrupted supplies and pushed up wholesale costs.
Heating oil is widely used in rural and off-grid communities with households typically buying large volumes through individual orders costing £500 or more.
The CMA found that the market is generally competitive and suppliers did not profit materially from the crisis. Most households can choose between providers and access enough information to compare prices.
However protections fall short of those provided to gas and electricity customers. Heating oil users do not have consistent support for vulnerable households or guaranteed access to independent dispute resolution when complaints cannot be settled with suppliers.
The problem becomes more serious during periods of volatile prices, severe weather or geopolitical disruption. Customers can face higher bills, uncertain delivery dates and fewer options when fuel is urgently needed.
Prices are generally lowest in Northern Ireland where more than 60% of households depend on heating oil. Homes are closer together which reduces delivery costs.
Remote communities in areas including parts of Scotland have fewer suppliers and face higher delivery costs. The CMA found that prices increased more sharply in some of these locations during the latest crisis.
It wants the UK government and Northern Ireland Executive to introduce a proportionate regulatory system requiring suppliers to register and meet minimum standards. These would cover price quotations, cancellations and independent dispute resolution.
Companies should clearly explain available payment plans and minimum purchase volumes. A register of vulnerable households should also be created while current rules on minimum orders should be reviewed so customers can buy smaller quantities.
The CMA is separately seeking compensation for around 1,700 customers whose orders may have been cancelled in breach of contract. Although they received refunds many had to reorder at higher prices or went without fuel.
Some households paid between £150 and £350 extra. Several suppliers have agreed to cover the difference or honour cancelled orders at their original price.
Sarah Cardell, Chief Executive of the CMA, said: “We have also found that around 1,700 customers were left in limbo by some suppliers after orders were cancelled as the crisis was unfolding. While it’s encouraging that some suppliers have agreed to compensate customers a number of firms still have not.
“We’ll be pressing them to do so and are preparing to take enforcement action if they don’t.”
