Personal Finances

It is estimated that 1.5 million households in the UK rely on heating oil (kerosene) to heat their home via an oil boiler. This group tends to be consumers based in rural areas where there is no gas infrastructure in place and electricity, oil, wood and coal are all used in conjunction as sources of fuel.

Heating oil is one of those commodities that should not be bought when it is required, but when the price is low. Having said this, many oil users, especially those struggling in a recession, feel there is little point in spending their hard-earned cash during the summer months when little or no oil is required.

The price of heating oil is ultimately determined by the crude oil price. The UK oil refineries provide daily prices to the 800 or so UK heating oil suppliers. These in turn add a premium to service their local customers, which covers transport, staff costs and some modest profit. So the price of heating oil varies every day and the spread of prices across the UK can be really quite substantial.

Logically you would buy and install the largest oil tank possible, wait until the price seems to be very low and buy as much as you can afford. However, planning permission is required to install an oil tank that is larger than 3,500 litres and most consumers have tanks with a capacity of just 1,500-2,500 litres, so the scope to buy in bulk is curtailed somewhat by legislation.

Many heating oil users consistently use the same oil distributor in the belief that the oil price is largely uniform across different suppliers, or because there is comfort in knowing that the driver knows where your property (and your oil tank) is located. There is now an online tool that allows a rapid comparison of heating oil prices. WhichOilSupplier lists the daily prices from named suppliers and allows the consumer to pick the cheapest price and order online. This takes the hassle out of ringing around suppliers and quotes can be seen in a matter of seconds.

So if you are making a New Year's resolution it might be an idea to upgrade to a 3,500 litre oil tank, buy your oil in the summer months when demand is low, and use a heating oil comparison site to ensure you are getting the cheapest price.

In their final instalment of a series of four articles aimed at helping those who have been adversely affected by the current economic climate, the Low Incomes Tax Reform Group looks at the state benefits which may be available, and how to claim them.