Heating oil for domestic homes

Learn about home heating oil for domestic energy and get tips on how households using this form of fuel can cut their energy bills.

 Amy Smith
Amy Smith
Updated 03 May 2023  | 4 min read

Key points

  • Heating oil is usually more expensive and inefficient than mains gas, but worth looking into if you’re off the gas network
  • Kerosene should be cheaper and more efficient than gas oil
  • Heating oil customers can still shop around for electricity as a way of cutting energy bills
  • There are a number of ways to cut the cost of heating oil, including shopping around, haggling, collective buying and getting the timing of a purchase right

Domestic heating oil

Although gas is by far the most popular way to heat homes in the UK, a significant minority live off the gas grid and for them, domestic oil is an alternative to electric heating.

Most domestic oil is used in boilers, but some households will need it for fires and cookers. Just like gas, it's controllable and on demand when needed.


Money saving for domestic heating oil customers

There are particular challenges if you’re a domestic heating oil customer. First, you need to keep your oil tank topped up  so you’ll have a heating source when you need it. Second, shopping around for the right price isn't as easy for you as for householders whose heating comes from the gas network (see below for how to get the best price on your heating oil).

However, there are ways you can save on your energy bills - you can still shop around for electricity, comparing tariffs and suppliers to find the right deal.


Can oil customers change their heating source?

If you’re connected to the main gas network, switching to a gas boiler and heating system should be a relatively straightforward - if initially expensive - exercise.

Mains gas should be cheaper than oil. It should also make shopping around for energy simpler. A mains gas boiler could even add value to your property.

If your home isn't connected to mains gas, there are other options:

Switching to kerosene

For a start, it's worth noting there are two main types of heating oil, kerosene and gas oil. Kerosene is cheaper, more common and efficient, meaning switching to kerosene from gas oil may be worth considering.

Electric heating

While it's not necessarily a cheaper option, electrical heating may be more convenient and easier to budget and shop around for. Electric may also be a better long-term option with the rise of time-of-use tariffs, the Smart Export Guarantee (SEG) and smart meters.

The SEG encourages people to use renewable energy to power their homes. An SEG tariff means you generate your own renewable power and are paid for the excess electricity you provide to the National Grid.

Other alternatives include coal-fired boilers, liquid petroleum gas (LPG/bottled gas) and biomass boilers (fuelled by wood).


Cutting heating oil costs

We don’t currently offer a comparison service for heating oil, but a quick online search should give you options.

The comparison market for heating oil isn't as advanced as for gas and electricity, so you’ll have to do more of the work yourself when shopping around.

Comparing prices is a great way to reduce costs but so is reducing the amount of oil you’re using. Installing a wood burning stove to help heat your house is a good option to reduce your need for oil. Wood burning stoves typically have low running costs if you’ve a free or cheap source of wood, and produce lower carbon emissions than oil.

It's worth noting that the sale of wet wood and house coal is being phased out from 2021-2023 due to the increased pollution it causes.

Installing smart energy monitors and thermostats means you’ll be able to keep an eye on energy usage and control your heating remotely. This’ll enable you to set-up easy-to-manage schedules so you’re only heating your home when you’re in.


Domestic heating oil prices

The Department for Business, Energy & Industrial Strategy publishes quarterly energy prices that can help you work out whether you’re paying the right price for your oil.

Here are some top tips that might reduce the price you pay:

  • Don't assume the price is set - haggling is almost always an option when you're shopping around, particularly in the unregulated heating oil market
  • Consider community purchasing - a cheaper price or delivery fee could be arranged if you join a heating oil club to buy in bulk with neighbours, family, friends, or others in your community
  • Timing is crucial - buyers in summer will typically pay less than midwinter buyers
  • Keep an eye on prices - prices of heating oil can change at any time. Stay alert to grab the best bargains
  • Watch the fuel gauge - buying when your oil tank is close to empty will mean you get the best saving on bulk buying
  • Don’t leave it too late - if your heating oil runs low and you need to organise an emergency delivery, you may need to pay an additional fee
  • Think about how you pay - each oil order is likely to be a significant purchase. Try to pay for it in the way that works to your best advantage. If you're disciplined enough to pay if off each month, a cashback credit card could be an option

Heating oil theft

One problem of buying in bulk is the target your full heating oil tank becomes to potential thieves, a particular issue in more isolated rural areas.

Security measures to consider on your property include strong, locked gates, CCTV and floodlighting. On the oil tank itself, think about a lockable cap, hardened casings for hoses, and devices to electronically monitor oil levels, which could be connected to an alarm.

Oil theft is also worth considering when arranging home insurance. Read your policy with care and, if in doubt, speak to your insurer.


Regulation of the heating oil market

If you’re a heating oil user you need to be aware there's no regulator to look after this market. Although some suppliers subscribe to a code of practice laid down by the UK and Ireland Fuel Distributors Association (UKIFDA).

Amongst other things, this asks members to resolve incorrect deliveries, explain payment options and charges, and to guarantee unit costs once agreed.

The UKIFDA has its own ombudsman, but it's also important to be aware that the institution is a trade body rather than a government-backed regulator. For the customer it's still very much a case of caveat emptor ('let the buyer beware').