CMA to investigate heating oil suppliers over ‘blatant profiteering’ from Iran war

Heating oil suppliers are to be investigated by the competition watchdog after accusations that firms are “blatantly profiteering” from the conflict in the Middle East by doubling the prices they charge to households.

The Competition and Markets Authority (CMA) said it had received “a number of concerning reports” in recent days from consumers reliant on heating oil about suppliers’ behaviour at a time of rising wholesale costs.

About 1.7m households in the UK, mostly in rural areas that are not connected to the mains gas network, rely on heating oil to warm their homes, cook food and provide hot water.

The CMA will look into consumer complaints about existing orders being cancelled, with customers then offered new quotes at significantly higher prices, and price increases for automated deliveries to customers that are triggered when the fuel in an oil tank drops to a certain level.

The watchdog said many retailers behaved responsibly and fairly, but that it would write to suppliers and intermediaries to ask for information about their practices and would consider whether they could breach consumer protection law. If potential breaches are identified, it may take enforcement action.

The CMA’s chief executive, Sarah Cardell, said: “We know many households are worried about rising prices as global events push up wholesale oil costs. It’s inevitable that some prices will rise, but they should reflect genuine cost pressures.”

The CMA’s intervention comes after Harriet Cross, the Conservative MP for the Scottish seat of Gordon and Buchan, called on the watchdog to investigate sudden price increases.

Prices for consumers reliant on heating oil have almost tripled since the start of the war n Iran, at a time of great volatility in global oil markets. Suppliers have told some households that they are unable to guarantee the cost or timing of a delivery.

The cost of heating oil is not covered by Ofgem’s energy price cap and it can vary between suppliers and in different parts of the country. Heating oil is typically a form of kerosene, meaning prices are linked to the cost of jet fuel, which is more reliant on Gulf suppliers than other petroleum products.

Oil is the primary heating source for two-thirds of homes in Northern Ireland, about 10% in Wales and 5% in Scotland.

However, Cross said 45% of homes in Aberdeenshire, including in her constituency of Gordon and Buchan, are not connected to the mains gas network and are therefore reliant on heating oil or liquefied petroleum gas (LPG).

She said she had been contacted by several constituents in rural areas who are facing sudden and unexpected price hikes, with the cost of 700 litres of heating oil doubling from £500 before the US and Israel launched attacks on Iran to more than £1,000, while delivery times have also been extended.

The MP said many of those affected by the cost increases were “disproportionately rural, often elderly and vulnerable”.

She is calling for a mandatory price transparency scheme to allow consumers to find the cheapest suppliers and has asked the consumer watchdog to look into what she believes to be “evidence of longstanding consumer harm”.

Cross wrote to the CMA: “I have been contacted by constituents who have experienced behaviour from suppliers that can only be described as blatant profiteering.

Steph (who did not want to share her surname) said her family of four was close to running out of heating oil at their home in Norfolk after their supplier cancelled an order placed and paid for on 1 March.

“They have effectively cancelled our order unless we pay more. It is – quite simply – daylight robbery,” she said.

Rachel Reeves criticised heating oil companies on Wednesday, telling MPs on the Treasury committee that she was “looking at some of those market practices”.

The chancellor has previously raised the prospect of government help, saying she recognised households reliant on heating oil are facing “unique challenges”. She told MPs on Wednesday she would “make decisions on what further action is … needed” after a meeting later in the day between officials and MPs from Northern Ireland and rural areas.

Kerosene prices almost doubled between late February and 9 March, according to figures from the UKIFDA. It said the average price for jet kerosene this year was 44.2p a litre until 24 February, before it started rising, reaching 87.4p a litre on 9 March.