Soaring heating prices left many struggling to heat their homes this winter

Study of domestic heating oil market to begin

A major study into the domestic heating oil market will begin next month after soaring prices this winter left many households struggling to heat their homes.

Energy Minister Charles Hendry said the Office of Fair Trading's study of "off-grid" energy will ensure the market is "fit for purpose" to avoid another crisis next winter.

Mr Hendry told the Commons the situation had been "potentially catastrophic" as snow blanketed the UK over the Christmas period.

The minister was responding to a Commons debate secured by Labour's Pat Glass (NW Durham) which was attended by MPs from all parties.

Ms Glass said: "This is a completely unregulated market where suppliers can - and do - do exactly what they choose."

She added: "Prices are being driven up not by a world shortage or global increases in the price of oil, although there is some of that going on, but here prices are going up 100 per cent in a very short space of time largely because suppliers are clearly taking advantage of people in desperate need during the coldest winter in a generation."

Mr Hendry said he had experienced the sudden spike in prices over the winter.

He told the Commons: "I know myself that when I sought to order oil for my own home in early December the price was 40p a litre and three weeks later it was 70p a litre.

"This, compounded by the very severe weather, made this move from a difficult situation into a potentially catastrophic situation."

By asking the OFT to bring forward its wider investigation into off-grid energy, which will include the heating oil market, Mr Hendry said he hoped changes could be made by next winter if necessary.

He said: "What I believe we have done is we have heard the concerns being expressed from every part of this country, from every single political party, from all types of different communities and we have decided that this is a time now when a full investigation into the way this market has worked is appropriate.

"I am very pleased indeed that the Office of Fair Trading is formally going to take forward that work.

"I believe that it will enable us to ensure that as we move forward to next winter we can learn from the problems which we have experienced this winter.

"We can therefore go into next winter with a market which is more fit for purpose."

The OFT will consult on the scope of its study until the end of February then begin work in March, he said.

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