Heating oil prices: why pay more?

If you’re one of the 1.5 million households in the UK that relies on oil or LPG to heat your home(1), you’ll know it’s a real headache to arrange deliveries. There's the constant worry of running out and a challenge to find the lowest heating oil prices.

How high are heating oil prices?

The price you pay for heating oil reflects the wholesale cost – and this can change significantly over time(2). Over the last decade, the average consumer price for heating oil in the UK has ranged from a peak of 68.8p per litre (February 2013), to a low of 28.6p (February 2016)(3). While at the start of 2020, heating oil cost 54.8p per litre, but had dropped to below 30p in May.

According to Energy Saving Trust figures(4) for the year to April 2020, heating oil averaged 4.8p per kWh. While gas cost 4.2p and LPG cost 7.2p. By contrast, standard-rate electricity cost 16.4p per kWh, while off-peak electricity averaged 9.8p.

Heating oil prices are a little higher than mains gas – but it’s important to consider the environmental impact, too. Oil is a fossil fuel and one of the worst polluting energy sources.

The Energy Saving Trust calculates that one kilowatt-hour of energy from gas results in 208g of carbon dioxide (CO2) being released. For LPG this is 241g, and for heating oil it rises to 298g – that’s 43% more than gas!

domestic heating oil storage tank in a garden

How can I pay less for heating oil? Use less!

While you can save money by shopping around for heating oil, the biggest savings come from using less of it! And that doesn’t necessarily mean cutting back on your use – but finding alternative ways to warm your home, generate hot water and power your cooking.

Many of these alternatives are also better for the environment too. For example, solar hot water heating can reduce how much heating oil you need to heat your home’s water(5). While solar panels may allow you to do more cooking with electricity, rather than heating oil.

But given heating’s one of the biggest energy demands in the home – and generates the most CO2 emissions(6) – this is where you should look to make the biggest changes.

Simple steps include home efficiency measures – like wall or loft insulation and draught-proofing. But if you want to go one step further, consider turning your existing boiler into a hybrid heating system.

hybrid air source heat pump installed at a house next to an exterior wall

Upgrade to hybrid heating

Air source heat pumps (ASHP) work much like a fridge in reverse: they use a compressor to move heat from the outside to the inside of a home. And because heat is being moved – rather than generated – they’re more efficient(7) than even the best oil or gas-burning heating systems.

In some highly efficient homes, an ASHP can meet all your hot water and heating needs. But it’s more typical to find them combined with an existing boiler. In these hybrid air source heat pump systems, the heat pump provides a ‘baseload’ of hot water and room heating. So you're not reliant on your oil boiler as much. In fact, it could reduce your boiler use by up to 80%: which is pretty much your home's heating needs covered.

And that means fewer headaches organising regular deliveries of oil. And, ultimately, paying less for heating oil – simply because you don’t need as much. Plus, with a hybrid system, you have a back-up heating system should your boiler ever fail.

Upgrade oil or LPG heating to a hybrid system

country house with hybrid air source heat pump

Why switch to a hybrid heating system?

It’s not just the cost of heating oil that you can save on with a hybrid heating system; they can reduce your overall energy bills. Here’s how…

You’ll spend more on electricity (because it’s now heating your home too) – and standard rate electricity is about three and a half times more expensive than heating oil(8). But heat pumps can be three or four times more efficient than even the newest oil or gas boilers(9).

This means that a well-designed hybrid ASHP system can still cost less to run. This is particularly true if you run the system overnight to make the best use of a cheap off-peak tariff. And if heating oil prices go back up to their previous highs.

ASHP systems also qualify for payments under the Renewable Heat Initiative (RHI). So you’ll receive payments over seven years from the government for updating your system.

Then there are the benefits of switching to a hybrid heating system for the environment. There's no escaping the fact that oil's a dirty fossil fuel, which is contributing to climate change. Whereas the heat you get from your ASHP can be emissions-free if you take out a renewable electricity tariff.

Plus: buying less heating oil means you don't have to shop around regularly to find the right prices. It takes the stress out of constantly organising oil deliveries. And means fewer tankers travelling down your local roads.

Using less oil may also mean you don’t need to store as much. So you’ll be less at risk of damage from any leak – or losses should you fall victim to thieves. It could even let you reduce the size of your oil tank, making it easier to hide out of sight. So why not find out if you can upgrade your heating to a low-carbon hybrid system?

Upgrade oil or LPG heating to a hybrid heating system

Related articles