Policy paper

Government response to the CMA heating oil market study

Published 13 October 2026

Government response to the CMA market study into the retail supply of heating oil for domestic use in the UK.

Introduction

The government welcomes the Competition and Markets Authority’s (CMA) detailed study on the home heating oil market in the United Kingdom^{[footnote 1]}. The report provides a vital and timely assessment of a market relied upon by around 1.5 million households across the United Kingdom, many of them in rural and off-gas-grid communities where alternatives can be more limited, and where running out of fuel can have serious consequences.

The conflict in the Middle East has driven up wholesale costs across global energy markets. The government cannot insulate households from every movement in international markets, but it can and will act to protect people from the worst impacts, particularly those least able to absorb sudden price rises.

Heating oil occupies a distinct position within the wider energy system. Unlike gas and electricity, it is not supplied through a continuously connected network or through the licensing framework that underpins the regulated retail energy market. Households typically buy oil in discrete deliveries from distributors, often in large volumes, and prices are closely linked to international kerosene markets, local delivery costs, and regional supply conditions. Under normal conditions, the market has generally been competitive, with many households able to choose between suppliers, and retail prices broadly reflecting wholesale costs.

However, recent disruption and volatility in global energy markets has exposed vulnerabilities in the heating oil market, and how it works for consumers. The CMA’s report makes clear that competition alone does not always guarantee good outcomes for every household. It identifies areas where consumer protections are less developed than in the gas and electricity markets, including the process for price quotations, the handling of cancellations, support for vulnerable consumers, and routes to redress. These issues matter because heating our homes and having reliable hot water are basic needs. People who rely on heating oil should be able to expect fair treatment, clear information, and a dependable service, particularly during periods of wider market strain.

The government recognises the individual challenges faced by households that depend on heating oil, including those in remote and rural areas, and those with limited ability to switch quickly to alternative forms of heating. We also recognise that many suppliers operate in demanding conditions and that any approach to strengthening the market must be proportionate, practical, and evidence-based. The objective must be a market that continues to deliver the benefits of competition while giving consumers confidence that they will be treated fairly when they need fuel for their homes.

This response sets out the government’s understanding of the issues identified, recognises the importance of ensuring the heating oil market works effectively for consumers, and reflects our commitment to continued engagement with the CMA, industry, consumer bodies, and the devolved governments.

As we consider the appropriate next steps, we will be guided by the need to protect consumers, maintain security of supply, support fair competition, and avoid unintended consequences in a market that plays an essential role for many households across the country.

Action we have already taken

The impacts of the Middle East Energy Crisis were significant. From a price of around 55 p/l before the crisis (February 2026), heating oil prices rose to 104 p/l in March^{[footnote 2]} and, at the time of publication, are rising again.

In March 2026, the government announced over £50 million of targeted financial support for low-income households who heat their homes with oil^{[footnote 3]}. In England, this support is being delivered through the Crisis and Resilience Fund by local authorities in areas with higher rates of oil heating. Funding has also been made available to the Northern Ireland Executive, Wales and Scotland, reflecting reliance on heating oil across the UK.

Furthermore, to accelerate the move to clean power and reduce the UK’s exposure to volatile international fossil fuel markets, and to bring down energy bills for households, this government is committed to ensuring that all homes can benefit from home upgrades. Through the Warm Homes Plan^{[footnote 4]}, we support a range of measures and technologies to suit the variety of homes across the country such as installing heat pumps, improving insulation, solar panels and batteries.

Evidence shows that most homes are suitable for heat pump installation, including those in rural and coastal locations. Innovation in the market is also helping. For example, high temperature heat pumps using different refrigerants such as propane can provide thermal comfort in leakier homes more efficiently; and manufacturers are providing specific models able to withstand coastal conditions. In November 2025, the government launched a consultation^{[footnote 5]} seeking views on low carbon heating technologies that could be used to decarbonise heat in the small number of properties that may not be suitable for heat pumps, and we will respond to that consultation in due course.

For households considering these alternatives to oil heating, the government is supporting the installation of low-carbon heating through the Boiler Upgrade Scheme (BUS). The scheme is open to domestic and small non-domestic properties in England and Wales and provides upfront grants towards eligible low-carbon heating technologies. It currently offers £7,500 towards the installation of air-to-water heat pumps and ground source heat pumps and £5,000 towards biomass boilers in limited circumstances.

A time-limited higher grant of £9,000 is available for eligible off-gas-grid properties replacing oil or LPG heating systems, helping households and small businesses most exposed to volatile fossil fuel prices to switch to low-carbon heating. The grant is deducted from the upfront cost by the installer, who applies to Ofgem on the property owner’s behalf. Eligibility, suitability and costs will vary by property, and households should seek advice from an MCS-certified installer before making changes to their heating system.^{[footnote 6]}

As published in the BUS August statistics^{[footnote 7]}, 49% of BUS grants have been paid to properties in rural areas and 38% to homes off the gas grid. For rural homes receiving a BUS grant, 96% were for air source heat pumps, 3% for ground source heat pumps and 1% for biomass boilers.

Taken together, these represent immediate financial support to help with the price of heating oil, and longer-term home heating upgrades to reduce households’ exposure to future price shocks. But we know more can be done.

Responding to the CMA’s recommendations

The CMA found that the market is generally competitive and that the sharp price increases following the conflict in the Middle East largely reflected higher wholesale costs, rather than suppliers making excessive profits. However, as the CMA pointed out, competition does not always guarantee good outcomes for consumers. The CMA identified significant gaps in consumer protections available as compared to households reliant on on-grid energy sources, including inconsistent support for vulnerable households, uncertainty over prices and cancellations, and more limited access to independent dispute resolution. The government welcomes the CMA’s detailed analysis and report.

The government recognises and accepts these findings. People who rely on heating oil need to have greater confidence that they will receive clear information, fair treatment, and dependable support. A proportionate regulatory regime is the only sustainable way to address the gaps in this market and provide heating oil consumers with stronger, consistent protections over the longer term. Getting that regime right will take time: it must be informed by evidence, developed with regulators, industry, consumer organisations, and the devolved governments, and designed carefully so that it protects consumers without reducing competition or security of supply. That is why our approach combines long-term reform with action now, strengthening existing protections and providing targeted financial support including through the Crisis Resilience Fund to help those households most affected by recent price rises while we develop and deliver the new framework.

The CMA’s report made recommendations which fall into three broad categories: consumer experience and protections; retail price spikes in times of wholesale volatility; and regional variation in consumer outcomes and experience. The report also suggested an ‘option to consider’ for UK government around price transparency.

In the rest of this document, we have set out our responses to these recommendations, and the options to continue to improve the market for heating oil consumers.

Several of the recommendations made by the CMA will require further work, evidence building, and engagement with both industry and consumers to ensure the best policy solutions are identified. The government welcomes further engagement with the CMA as it takes this forward.

This is a response on behalf of the UK government. Heating oil policy is reserved across Great Britain, but transferred to Northern Ireland, so our responses to Recommendations 1-5 will apply to Great Britain only. For the ‘options to consider’ on price transparency, whilst consumer protection is reserved policy for Scotland and Wales (it is transferred in Northern Ireland), consumer advocacy is devolved in Scotland. As such, we will work closely with Scottish Government to determine the need for any intervention in this area. Where helpful we also stand ready to engage with the Northern Ireland Executive as they consider these recommendations in parallel in respect to their transferred responsibilities.

Consumer experience and protections

CMA recommendations

Recommendation 1: Proportionate market regulation –

UK government and the Northern Ireland Executive should enable, and Ofgem and the Utility Regulator should implement, the introduction of a proportionate regulatory regime that provides for the authorisation of home heating oil distributors and includes:

• a system for identification – and maintaining an up-to-date record – of heating oil households
• a priority service programme to ensure the prioritisation of vulnerable customers during periods of volatility
• a mandatory code of conduct that requires distributors to offer access to alternative dispute resolution services, sets clear and consistent standards for distributors’ supply terms and conditions and requires clear signposting by distributors of available support schemes for vulnerable customers and rights
• enforcement powers for Ofgem and the Utility Regulator; and
• a monitoring obligation for Ofgem and the Utility Regulator

Recommendation 2: Interim measures to protect consumers –

As an interim step and pending the introduction of Recommendation 1, UK government, the Northern Ireland Executive, and relevant consumer bodies should work together with UKIFDA and NIOF to improve existing consumer protection initiatives, awareness of and access to ADR and codes of conduct.

Government response

Recommendation 1: Agree in principle
Recommendation 2: Agree

It is clear that the heating oil sector is not working as it should for consumers. We agree with the CMA assessment that recent price increases largely reflected rising wholesale costs. However, there are clear gaps in consumer protections compared with gas and electricity customers which can lead to poor outcomes, especially during periods of volatility and for vulnerable consumers. This includes the process for price quotations, order cancellations, support for vulnerable consumers, and access to redress.

A proportionate regulatory regime is only sustainable way to address the gaps in this market and provide heating oil consumers with stronger, consistent protections over the longer term. The design of a framework will need to address the issues identified and even the playing field for heating oil consumers, without being burdensome on suppliers; as fewer suppliers in the market will only weaken competition and lead to a worse deal for consumers.

In the Ofgem Review: final report^{[footnote 8]} published in April 2026, we said we would enable Ofgem to act as a strong consumer champion with new powers to protect families and business. This gives us the framework to consider an appropriate regulatory regime for the heating oil market. We will spend time getting this right; building a robust evidence base, extensive engagement with key stakeholders, and ensuring we have the right legislative framework to take this forward.

As an interim priority we agree to work with industry to strengthen consumer protections through existing Codes of Conduct, consumer protection initiatives, and awareness of and access to dispute resolution whilst longer-term regulatory solutions are worked through.

We will work closely with Ofgem, UKIFDA and wider industry bodies where necessary on their ongoing review of Codes of Conduct, to ensure the right balance between strengthening consumer protections and market functionality.

The CMA concluded that the UK government and Northern Ireland Executive should not seek to regulate the prices charged by home heating oil distributors at this stage. For this reason, the government is not proposing simply to replicate the gas and electricity price cap for heating oil. Instead, the government’s focus is on targeted financial support for those most at risk, continued monitoring of supply and pricing, and proportionate consumer protections that address the specific issues identified by the CMA.

Retail price spikes in times of wholesale volatility

CMA recommendations

Recommendation 3: Minimum order volumes –

UK government and Northern Ireland Executive should:

• conduct a review of the rules and regulations that restrict minimum order volumes; and
• if it is the case that existing regulations are constraining minimum order volumes, consider introducing a mechanism through which rules could be relaxed, in particular in times of volatility

Recommendation 4: Payment plans –

Any code of conduct adopted under Recommendation 1 or Recommendation 2 should require authorised distributors to clearly signpost available payment plans and minimum order volumes, and the reasons for those minimums.

Government response

Recommendation 3: Agree
Recommendation 4: Agree

We recognise that minimum order volumes can make it harder for some households to manage the upfront cost of heating oil. As the CMA’s report points out, the applicable regulations do not prescribe a minimum order volume. Instead, the smallest quantity that can be delivered depends on the approved operating range of the measuring equipment fitted to each tanker, and some systems are approved for smaller deliveries.

Nevertheless, we will look at whether the way the relevant rules and industry guidance are applied in practice is unnecessarily restricting consumers’ options and, if so, what the appropriate next steps would be. While there are clear benefits to consumers being able to purchase smaller volumes of heating oil on a more regular basis, including spreading the cost, it is vitally important that consumers are getting an accurate delivery of heating oil.

Regional variation in consumer outcomes and experience

CMA recommendations

Recommendation 5: Use of regional data analysis –

UK, Scottish and Welsh governments and the Northern Ireland Executive should explore how the findings in this report could be used to inform existing and future schemes aimed at addressing poor consumer outcomes to target them at consumers in the areas most susceptible to high prices and supply disruption during periods of volatility, including whether such households should be prioritised for accelerated transition to alternative energy sources.

Government response

Recommendation 5: Agree

We recognise that heating oil consumers’ experiences can vary significantly across the country. Correspondence received by the government has highlighted concerns from households in rural and remote areas about substantial differences between prices quoted in different regions, alongside uncertainty about whether those differences reflect genuine delivery and supply costs.

Regional variation can arise for legitimate reasons, including transport distances, local storage and distribution arrangements, the number of suppliers operating in an area, and local patterns of supply and demand. However, households should have confidence that the prices and terms they are offered are fair, transparent, and capable of being understood.

We will therefore use the CMA’s regional analysis, alongside wider market data and evidence from consumers, to improve our understanding of where poor outcomes are concentrated. This evidence can inform the design and targeting of any future support and consumer-protection measures, including consideration of households that are vulnerable, face persistently higher prices, or have limited practical choice of supplier. We will work closely with the Scottish and Welsh governments and relevant consumer bodies, recognising the particular circumstances of rural and remote communities.

We agree to consider regional analysis and differences across the country as part of future scheme design, to ensure the best outcome for consumers in all areas across the country.

Price transparency

CMA recommendations

Option to consider –

UK government to consider developing a temporary price checker tool, using the CCNI Price Checker tool as a model, for Great Britain that could be activated in times of volatility.

Government response

Further work required

We agree with the CMA analysis that while there is generally good price transparency in the home heating oil market under normal trading conditions, price transparency via online tools varies by region (with lower price transparency in Scotland) and during times of volatility (when price transparency reduces throughout Great Britain. During such periods, consumers in Northern Ireland continue to benefit from the CCNI Price Checker tool).

Consumers can be left with a particularly challenging landscape to navigate, with inflated market prices, decreased price transparency, uncertainty as to which suppliers can offer product, and uncertainty regarding the price they may seek to charge on the day of delivery. The cumulative effect of such challenges may be felt particularly strongly in remote, rural areas.

Price transparency is an important feature of a well-functioning heating oil market, helping consumers compare offers and make informed purchasing decisions. Our initial assessment indicates that, under normal market conditions, existing commercial price comparison services already provide this function effectively in much of Great Britain and Northern Ireland. Where the market is adequately meeting this need, creating a government-run service could duplicate existing provision and would be unlikely to represent value for money.

However, existing tools may not provide consistent coverage across all regions or remain as effective during periods of market volatility. We will therefore undertake further assessment of the coverage, accessibility and resilience of current provision—and consider whether there are identifiable gaps that would justify a proportionate government role.

Next steps

The government welcomes this vital and timely market analysis from the CMA, and we are committed to ensuring this work leads to real and meaningful action. Consumers should feel the benefits of stronger protections – clearer rights, better support for vulnerable households, and easier access to support when things go wrong.

This response combines practical action now with a clear path towards stronger, consistent, and proportionate protections for the long-term. We will continue to build a strong evidence base, and we welcome ongoing engagement with the CMA, Ofgem, industry, consumer organisations and the devolved governments in helping us deliver this. Through this, we will create a fairer, more resilient heating oil market.

Recommendations summary

Consumer experience and protections

Recommendation	Government response
Recommendation 1: Proportionate market regulation – UK government and the Northern Ireland Executive should enable, and Ofgem and the Utility Regulator should implement, the introduction of a proportionate regulatory regime that provides for the authorisation of home heating oil distributors and includes: – a system for identification – and maintaining an up-to-date record – of heating oil households – a priority service programme to ensure the prioritisation of vulnerable customers during periods of volatility – a mandatory code of conduct that requires distributors to offer access to alternative dispute resolution services, sets clear and consistent standards for distributors’ supply terms and conditions and requires clear signposting by distributors of available support schemes for vulnerable customers and rights – enforcement powers for Ofgem and the Utility Regulator; and – a monitoring obligation for Ofgem and the Utility Regulator	Agree in principle
Recommendation 2: Interim measures to protect consumers – As an interim step and pending the introduction of Recommendation 1, UK government, the Northern Ireland Executive, and relevant consumer bodies should work together with UKIFDA and NIOF to improve existing consumer protection initiatives, awareness of and access to ADR and codes of conduct.	Agree

Retail price spikes in times of wholesale volatility

Recommendation	Government response
Recommendation 3: Minimum order volumes – UK government and Northern Ireland Executive should: – conduct a review of the rules and regulations that restrict minimum order volumes; and – if it is the case that existing regulations are constraining minimum order volumes, consider introducing a mechanism through which rules could be relaxed, in particular in times of volatility	Agree
Recommendation 4: Payment plans – Any code of conduct adopted under Recommendation 1 or Recommendation 2 should require authorised distributors to clearly signpost available payment plans and minimum order volumes, and the reasons for those minimums.	Agree

Regional variation in consumer outcomes and experience

Recommendation

Government response

Recommendation 5: Regional data analysis – UK, Scottish and Welsh governments and the Northern Ireland Executive should explore how the findings in this report could be used to inform existing and future schemes aimed at addressing poor consumer outcomes to target them at consumers in the areas most susceptible to high prices and supply disruption during periods of volatility, including whether such households should be prioritised for accelerated transition to alternative energy sources.

Agree

Price transparency

Recommendation	Government response
Option to consider – UK government to consider developing a temporary price checker tool, using the CCNI Price Checker tool as a model, for Great Britain that could be activated in times of volatility.	Further work required

1. CMA (2026) Heating oil market study ↩

2. DESNZ, Monthly and annual prices of road fuels and petroleum products ↩

3. HM Treasury (2026) ‘Over £50 million to help families struggling with soaring heating oil costs’ ↩

4. DESNZ (2026) ‘Warm Homes Plan’ ↩

5. DESNZ (2025) Exploring the role of alternative clean heating solutions ↩

6. Ofgem, Boiler Upgrade Scheme (BUS) ↩

7. DESNZ (2026) Boiler Upgrade Scheme statistics: August 2026 ↩

8. DESNZ (2026) Ofgem Review: final report ↩