Last week we commented on the CMA’s response to heating oil costs, and today the UK government has announced its intention, alongside short term measures to subsidise consumption for vulnerable customers, to shift towards potential regulation of the heating oil sector to further protect consumers. 

A step towards regulation

This announcement signals a major shift in the government’s approach to heating oil. Although it serves the same purpose for households as gas, heating oil currently has far fewer consumer protections. The government's potential move toward formal regulation - whether through a new ombudsman, an expanded Ofgem remit, or new statutory powers - would represent a fundamental change for the sector. It also implicitly acknowledges that the CMA’s toolkit is not well‑suited to the concerns the government has highlighted.

From a regulatory standpoint, the emphasis on price transparency, dispute resolution, and protections for vulnerable customers would bring heating oil closer to other regulated energy markets. It mirrors the recent approach to heat networks, where a mandatory regulatory framework (overseen by Ofgem) has recently become operative, albeit after several years of legislative scrutiny and regulatory development.

What does this mean for the future of the heating oil sector?

For suppliers, this points to a possible future where compliance obligations, reporting requirements and customer‑service standards could increase materially. For consumers, it suggests the government is beginning to look beyond short‑term financial support towards deeper, long‑term reforms in how the market operates, particularly for those most exposed to price volatility. 

Government will need to consider carefully how these measures inter-relate with other policy objectives, particularly those around encouraging shifts towards alternative technologies such as heat pumps as part of the broader energy transition.