Heating oil prices

Oil well

Roughly 1.5 million homes in the UK aren’t connected to the national gas grid, instead using oil as a fuel for their heating. Here we look at the pros and cons of using kerosene and gas heating oil.

If homes aren’t connected to the national gas grid, the chances are they use heating oil for their central heating systems, or liquefied petroleum gas (LPG). 

Heating oil is different to gas from the grid as it’s delivered to the property and stored in a tank. Homes which use oil will have a specific oil boiler, rather than a gas boiler supplied by mains gas. Also, if you have mains gas, you can compare energy deals from the big energy suppliers. With heating oil, things work a little differently. Here we look into the ins and outs.

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What are the different types of heating oil?

There are two main types of heating oil used for domestic heating.

  • Kerosene heating oil. This is generally known as heating oil or 28-second oil, and is a much lighter, cheaper and cleaner fuel compared to gas heating oil. Kerosene is also the most common type of heating oil used in homes in the UK.

  • Gas heating oil. This is also known as red diesel or 35-second oil, because of its distillation process. Gas heating oil is usually used in agriculture, for commercial purposes or very old boilers. This also tends to be much cheaper than road diesel because it’s a rebated fuel, meaning it attracts less duty.

The type of oil you should use for your property is determined by the type of heating system your house has. If this isn’t clearly labelled, enquire with your landlord or previous owner. If you’re not getting anywhere, reach out to Oftec, the Oil Fire Technical Association.

Kerosene heating oil is a much more efficient oil. If your boiler can burn either type of oil, kerosene would be your best option.

Why should I use heating oil for my central heating?

Kerosene heating oil is used for domestic heating in millions of homes around the UK and is the popular choice among heating oils. Kerosene burns cleanly, efficiently and has great winter performance.

What is gas oil used for?

Gas oil is mainly suited for agriculture and commercial purposes, and is commonly used for fuel in cranes, tractors and bulldozers. Gas oil is also used to power generators at carnivals, festivals and large events which require a large amount of power.

While gas oil is much cheaper to use than road diesel, it’s important to note that using gas oil in a vehicle used on a public road is illegal.

How much heating oil does a house use in a year?

If yours is one of the 1.5 million UK homes that relies on an oil-fired boiler, how much heating oil you burn through a year all depends on a number of factors. These include:

If you’re moving into a new home which uses heating oil, it may be helpful to ask the current owners how much oil they burn throughout the year. You can then use this as a guide for your consumption.

Home heating oil delivery

What is premium kerosene?

You can also buy a premium version of kerosene. This contains additives which makes it burn more cleanly and efficiently. Premium kerosene usually costs between £20 and £30 more (per 500 litres) than the standard heating oil. It’s also possible to buy the additives yourself.

How is kerosene made?

The production of kerosene has now become a much easier process over time. Kerosene is made through a process called fractional distillation, which involves separating the compounds of crude oil. Once this is separated, a clear and thin oil is created, which is called kerosene.

How much does heating oil cost?

The price of heating oil fluctuates dramatically over time. Back in 2016, a litre cost between 30 and 35p. In mid-January 2024, it costs around 74p a litre, but the price peaked in June 2022 at 111p per litre.

Where can I buy heating oil?

An idea of heating oil prices can usually be found via comparison sites:

But to find the cheapest suppliers of heating oil, it’s a good idea to shop around and compare quotes from a range of local and online companies before you commit.

You can search for suppliers in your area via the UK and Ireland Fuel Distributors Association (UKIFDA), which is a trade association for the industry. If you have doubts about a supplier, you can contact UKIFDA at [email protected].

Tips for getting the best heating oil prices

To make sure you’re getting the cheapest heating oil prices, it’s worth being organised:

  • Buy well in advance. Planning ahead usually means you’ll get a better price, even if that means waiting longer for your oil. For this reason, it’s best not to let the tank get too low before you order. Start making plans to buy when it falls to a quarter full.

  • Stock up in the summer. Demand for heating oil is at its lowest in the summer, so prices tend to be cheaper. As prices fluctuate so much, it’s always worth keeping an eye on them.

  • Buy heating oil in bulk by joining or forming a club. If your tank doesn’t have a huge capacity, you might benefit from discounted oil by joining a heating oil club. This clubs you together with other people in your area ordering heating oil.

    You could even start a heating oil club yourself with friends and neighbours who live close. Bear in mind that a lorry can carry a volume of between 18 – 20,000 litres, so anything above this will necessitate a second order.

  • Don’t be afraid to haggle. Heating oil companies expect a bit of negotiation, so it’s worth haggling for a better price – especially if your order is boosted by being in a heating oil club. Get a range of quotes from different suppliers to help when you’re bargaining.

How much oil do I need to buy?

Households using heating oil get through roughly 2,500 litres a year. At the time of writing, this means an annual heating oil fuel bill will be around £1,850.

Tanks tend to hold between 1,000 and 1,500 litres, meaning you’ll probably need to make two or three orders a year. Larger tanks can hold up to 3,500 litres though.

What causes heating oil prices to fluctuate?

Price fluctuations can be due to a number of reasons. Some of these include the increase or decrease of global production, increase in demand, conflict in oil producing countries and VAT rates. Even the weather can affect the price.

Prices can also depend on where you’re located in the country, the time of the year you buy heating oil in, and the amount you buy as well. Again, it’s a good idea to be part of a club so you can buy in bulk.

It’s worth noting that the liquid fuel industry doesn’t have a regulator, which means that pricing isn’t as transparent as it could be. It’s best to go for suppliers associated with UKIDFA, as you’re more likely to see any complaints or disputes resolved to your satisfaction.

What are the pros and cons of using heating oil?

Pros

  • Efficiency. Compared to natural gas, heating oil burns at a high temperature and delivers more heat compared to other sources.
  • Safety. Heating oil isn’t explosive like gas despite being flammable. Plus it doesn’t produce carbon monoxide.
  • Low initial costs. Heating oil tends to be cheaper to burn than gas.

Cons

  • Maintenance. Heating oil produces significant dirt and soot, meaning that chimneys and filters need to be cleaned on a regular basis. It’s also important to look after your tank, as any damage can have an effect on your oil. Get your tank inspected annually, and keep an eye out for signs of corrosion, cracks or discoloration.
  • High long-term costs. Despite heating oil having a low initial cost, long term it does cost more than natural gas. At the time of writing, it costs almost double the amount annually to heat your home and water with heating oil.
  • Requires additives. In order to keep your boiler running as efficiently as possible, it’s recommended to mix heating oil additives into your supply.
  • No automatic supply line. As heating oil isn’t connected to the National Grid, it’s up to the owner to sort out the supply of heating oil.
  • It’s expensive to switch. If you want to have your home supplied with mains gas, it’s pricey. If you live within 23 metres of a gas main, it’s cheaper, but it can still cost between £500 and £1,500 for connection, and thousands for a new boiler. If you don’t live within range of a gas mains, the cost is prohibitive.

How to save money on heating your home

Although you’re using a different fuel, the way your home is heated is largely the same. So check out our energy saving tips for ways in which you can reduce usage, and keep your bank balance in check.

You might also wish to look into whether it’s better to leave the heating on low all day, or use timed bursts. And if your home is in a low council tax band, and isn’t the best in terms of energy efficiency, you may qualify for subsidised insulation via the Great British Insulation Scheme.

If you’re struggling to pay your bills, it’s worth seeing what help is available with your energy bills. It’s also a good idea to see if you qualify for the Warm Home Discount, Winter Fuel Payments and Cold Weather Payments.