Cheap Heating Oil

The 1.3 million UK households who rely on a heating oil tank to warm their homes risk overpaying due to an under-regulated market that gets too little political attention. There's no slick solution, but there are things you can try to cut heating oil prices.

This is our home heating oil cost-cutting system, to ensure you're not missing out on key moves to cut your bills. Prices have risen again recently and the average annual bill for a typical three-bedroom home is now £785. But, prices are seasonal and as winter nears, the costs are going up. If you want to beat the seasonal price hikes, now's a great time to stock up on heating oil.

Heating oil: the basics

This guide's specifically for those using home heating oil, and it focuses only on that (not LPG or renewables). Instead of getting gas via pipes, oil is delivered in a lorry and stored in a tank. It's likely you've tried these tricks, but we don't want you to leave anything unturned. If you're new to heating oil, you can find cheap suppliers via the steps below, but ask the old tenants too.

You can get two main types of heating oil – kerosene or gas oil. Which you need is determined by the type of boiler you have. Kerosene is most commonly used in homes and is more efficient, so if your boiler takes either oil, it's usually worth going for this one.

Now's a great time to be on heating oil as prices have fallen dramatically over the last few years. Four years ago it cost an average £1,280/year to heat a typical three-bedroom house, according to Sutherland Tables, a source of information on domestic heating costs. It now totals about £785 (on average) to heat the same home – that's a drop of nearly 40% in just three years.

But prices are up on the lows of last year - by around £100 - and with higher demand in winter, costs are expected to rise further this year. So act now and grab what you need to beat the hikes.

Abominably, there's no regulator to look after heating oil users, leaving you high and dry on price transparency and fairness (though there is a code of practice some suppliers subscribe to – more details below). But there are three things you can control to net cheaper oil:

Step 1: Compare oil prices online

Knowledge is power, so the first step is to ensure you know the type of price you should be looking to beat.

Industry insiders say to make a profit, suppliers typically add a minimum of 4p/litre onto the wholesale price they pay. If you're anywhere near this, you've got a good price. There's no easy way to get wholesale prices (we're on it) but BEIS publishes a quarterly report which may help.

Also, use specialist heating oil sites to compare rival companies. There are two types of sites – brokers and simple comparisons. With the brokers, they secure a deal and you pay them if you're happy with the price. A comparison simply lists the cheapest prices it can find.

Note down prices and the name of the supplier if you can, though not all sites will reveal this. The more you try the better, but check at least two. Start with these (we picked them as they're independent but feedback is scant, so they're listed in no particular order):

Do you use a better comparison site? Please let us know.

It's important to note we're not suggesting you just buy from these sites – brokers often charge a bit more for doing the legwork. Some comparison sites aren't transparent about being linked to parent oil suppliers, but all the sites above are currently independent of any oil giants.

Step 2: Haggle down prices

Once you've benchmarked prices, you can start to whittle costs down even more by haggling. Here's how...

• Find a list of suppliers in your area

  Not all suppliers are physically able to send tankers to your area, so as well as noting down names from the comparisons above, use the Federation of Petroleum Suppliers (FPS) Directory, Yellow pages, Yell or Google Maps to find your local ones.

• Ask if it can beat the quote you have

  Pick a supplier, call it up and haggle. Don't be shy. This is a haggling business. If you've never haggled before, don't try and be overly clever. You're just calling to give it a quote and see if it can beat it. The more oil you order, the bigger discount you're likely to get.

  You're more likely to get a result if the staff member empathises with you. If you're polite, charming and treat the process with humour, you'll get further – never be aggressive.

  As negotiations come to a close, a classic sales technique is staying silent. They want you to accept the price just to fill the silence. Make them fill it with a cheaper offer.

• Continue the process with more suppliers

  After your first haggle, whether it worked or not, call a few more suppliers, quoting the best price you've had and see who can beat it. To speed up the process, you could simply knock some off your existing price and say this is what you want them to beat. But don't go too far with this – if it's unrealistic, it may say no.

  If you've got a regular or preferred supplier, or someone who has spent lots of time helping you, go back to it to see if it will match the best price you've found.

Pick a FPS-accredited supplier

The Federation of Petroleum Suppliers is the trade association for the oil distribution industry, funded by members (like most trade bodies). It has a code of practice that it asks members to adhere to. The code asks members to clearly explain payment options and charges, not to change unit costs once agreed and to resolve incorrect deliveries among other things.

The FPS has also appointed its own ombudsman to resolve any complaints. The protection for consumers isn't as robust as it would be with a formal government backed regulator and ombudsman but it's a good place to start.

Check your supplier is accredited to the FPS, it should bear a logo on its website.

Step 3: Time your purchase right

The price you pay for your oil is directly influenced by the wholesale price suppliers pay which fluctuates on a daily basis (plus their profit margins on top).

The giant gas & electricity suppliers buy energy ahead when the price is cheapest. But heating oil suppliers don't do this, so short-term fluctuations more directly affect prices. Therefore, timing is everything:

Summer's often the best time to buy. Low demand drives prices down. December is often the priciest month.

Yet it's also important not to leave buying oil to the last minute. Emergency deliveries can cost about 10% more. Plan ahead and get quotes with a few weeks spare to give yourself the most flexibility and best prices.

Get into a routine of checking your oil level so you can judge when to order – most tanks come with a basic gauge – or have a dipstick handy. You can get fancier gizmos which automatically alert you when you're low on oil (or if sudden drops occur) but these can be pricey.

If you want to really hone your savings, monitor prices daily using the price chart from Boilerjuice and time your buying for when prices are dipping.

Step 4: Buy in bulk for discounts

Discounts are usually, though not always, available the more oil you buy, whether this is buying ahead for yourself for the year, pairing up with a neighbour or joining an oil-buying group. The bigger the buy, the bigger the savings, so joining a group will probably get you the best price.

If buying on your own, bear in mind the more oil you buy and store, the bigger the loss if you're unfortunate enough to be a victim of oil theft.

Group together for purchase power

In the right kind of numbers, bulk-buying heating oil as a village can give you leeway to negotiate better deals with the oil suppliers.

It's also in the supplier's interest, since it saves on petrol by not having to make multiple trips to the same area. Many can slash around 5% off prices this way.

Lots of heating oil clubs already exist, set up by individuals or companies. Some charge a small admin fee, but steer clear of any asking for large amounts.

How to set up your own club

Setting up an oil club is fairly simple. But does require someone who's willing to chase quotes and organise members. Around 20 people ordering around 10,000 litres of oil is the optimum for getting a really good deal while still being able to organise a group easily.

Simply ask people in your area to commit to an amount of oil and get quotes for the group every month (or take it in turns) or so. See the steps above for how.

Even teaming up with just one neighbour can save a decent amount. The heating oil company will strike a deal and bill each person individually. Most firms are happy to do this provided you live reasonably close to each other.

Quick questions

Step 5: Pay the right way

Most suppliers have a minimum order of 500 litres a pop, which will set you back around £150-£200. It's a big outlay so it's important to manage your cash properly. If you're buying via a club you may pay it and it will take care of payment to the supplier, if not, these tips apply to you.

Look after your tank and oil

Both the oil you buy and the tank you store it in cost large, so if things go wrong you'll be seriously out of pocket.

The Oil Firing Technical Association (Oftec), the body which represents suppliers, suggests you get an annual tank inspection for starters. But you can do simple checks for corrosion, cracks and discolouration yourself and make sure no debris can get into the tank to affect the oil. See the trade body Oftec's guides for more.

Watch out for heating oil theft

Heating oil theft still happens. Here are a few things to try to limit the risk (from Oil Theft Watch, founded by Boilerjuice). It also allows you to register for theft alerts in your area.

• Check you're covered by your household insurance (see our Cheap Home Insurance guide). Ask if it will cover for you loss, theft, plus damage and clear-up costs if there's a spillage.
• Keep all gates to your property closed and securely locked at all times and ensure gates and fences are in good repair.
• Install suitable security floodlighting and consider installing CCTV around your property.

• The location of oil tanks can be a critical factor. Ideally they should be situated within sight of your home, but not visible from the road. If tanks are visible, plant hostile (thorny) shrubs around your tank.

  Thieves will think twice before forcing their way through a prickly hedge, and the smallest trace of blood or shred of ripped clothing could provide enough forensic evidence to identify the offender.

• Regularly check fuel levels so you easily spot if the level drops. Most homeowners only check their tanks every few weeks, and therefore wouldn't realise how much oil their tank contained. Remote electronic oil monitors, which set off an audible alarm if the oil level in the tank suddenly drops, can be fitted to most tanks.
• Install lockable caps with crop-proof padlocks/fittings and where possible fit vulnerable fuel hoses with hardened/flexible casing so they are harder to cut.
• If you are installing or resiting an oil tank, consider securing the tank in an alarmed, ventilated, locked structure or cage. But please remember the oil tanker driver will need access to fill the tank.

Your rights if things go wrong

Sadly and bewilderingly Ofgem the energy regulator doesn't have any responsibility for heating oil and there are no immediate plans to change that. With no consumer body to protect heating oil users, it's not as easy to get redress as it is with other purchases.

So unfortunately this means you will need to rely on the courts if things go badly wrong. However, the small claims court is relatively easy to use and not as scary as you may think. First, however, try the following:

The types of issues you might encounter include:

• The supplier charges a higher price than originally quoted
• More oil than you ordered is delivered
• Oil is delivered to the incorrect address
• You get someone else's order.