I also commented on the recent regulatory review in Ireland, which concluded that the consumer price changes following the start of the Iranian conflict did not indicate a dysfunctional market or disproportionate retail price increases.
A lot has happened since EXPO, not least the King’s Speech to the UK Parliament, which introduced the Energy Independence Bill. This isn’t new – it was signposted in the previous King’s Speech and featured in the 2024 Labour manifesto.
I think now’s a good time to revisit some of the key points from my EXPO presentation.
“Over the last 15 years, heating oil prices have not changed – despite inflation running at 45%.”
What the data tells us
As many of you know, I love good data points. I shared that over the last 15 years, heating oil prices have not changed – despite inflation running at 45%. Meanwhile, the price of a pint of lager has risen by 58%, a pint of milk by 41%, and a glass of wine by a whopping 74%.
I also highlighted that heating oil prices return to normal levels much more quickly than those of other energy sources, such as gas and electricity. Part of the explanation is that liquid products like beer and wine are subject to regulation, particularly through the tax system, which has steadily increased over the years.
Gas and electricity prices, meanwhile, carry a significant and growing burden of legislative costs. Corporate consolidation has also reshaped the landscape – three companies now control almost 75% of the gas and electricity markets in Great Britain, while the heating oil sector remains served by around 150 companies.
The moral of the story is: Be careful what you wish for.
The need to learn the lessons
There is a real concern for customers and the industry as the conflict in Iran continues to keep jet fuel, and therefore heating oil, at elevated prices. As UKIFDA and others commented to the CMA, a major factor is the loss of refining capacity across the UK and Europe. Since the last regulatory review, the UK has lost 50% of its refineries, and Europe has lost 30% since 2009.
This is the key lesson: we all need liquid fuels, and no credible projection suggests otherwise. What we need is the capacity to produce them.
I was disappointed not to see this issue addressed in the briefing around the Energy Independence Bill. In my opinion, the Bill must include plans to increase domestic refining capacity, particularly for renewable fuels. We cannot afford to throw away any more capacity.
The need to help consumers
Right now, one of the government’s priorities has to be the high price environment facing heating oil customers. At current levels, many households will struggle. Some are already delaying purchases, which risks creating supply chain pressures heading into winter – pressures that will inevitably push prices even higher. We also know from experience that the most vulnerable customers are the hardest to reach. They often don’t self identify.
Industry and governments across the UK and Ireland must work together to find a mechanism that supports consumers without undermining the competitive market that has proven responsive and resilient for 15 years. UKIFDA stands ready to play its part.
Do we still live in a throwaway society?
People often talk about a throwaway culture – discarding things long before their useful life is over. Increasingly, this seems to apply to people as much as products.
In my EXPO presentation, I commented that over the same 15 year period, the UK has had six prime ministers. As I write this, in the aftermath of the local elections, I can’t help wondering whether that number is about to change again. It’s becoming an occupational hazard.
To put it in context:
- Average tenure of a UK Prime Minister: 2.1–2.5 years
- Average tenure of a FTSE CEO is currently 6 years
- Average tenure of a football league manager: 1.8 years (2.4 in the Premier League)
“The last thing customers want to throw away is their boilers – or their money.”
Yet our research shows that the last thing customers want to throw away is their boilers – or their money. They want to decarbonise, but they want to do it using renewable liquid fuels in their existing appliances. This was made abundantly clear by the 16,000 consumers who responded to the recent consultation.
I was pleased to meet officials from the Department for Energy Security and Net Zero, along with local MPs, during their fact finding visit to Kehelland. Seeing the community’s support for renewable fuels and hearing directly from real consumers was invaluable.
As the Energy Independence Bill progresses through Parliament, I hope it reflects this reality and provides a route to enact the Renewable Liquid Heating Fuel Obligation. The residents of Kehelland made a simple request during the visit: HVO by Christmas.
Ironically, while our customers don’t want to throw things away, the failure of government to embrace the waste-based renewable liquid fuel solution they’re asking for is the ultimate example of throwing away.
Image credit: UKFIDA
