How to save money on your oil bill

by Malcolm Wheatley on 15 May 2009  |  4 comments
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1.5 million households rely on heating oil. If you're one of the them, Malcolm Wheatley explains how you can cut the cost of your oil bills.

The price of oil touched $60 a barrel this week - worrying news for the UK's one and a half million households who rely on it for heating and cooking.

Last year's spike in oil prices -- oil reached the dizzy heights of $147 in July - added an estimated £430 to the annual bills of those households, taking the typical annual expenditure to £1,135. Households using gas, by comparison, enjoyed annual bills of half that level, at £650.

And people with larger houses, or who rely heavily on their central heating systems, could pay much more. When prices peaked last July, filling our tank up with 2,000 litres of oil cost an eye-popping £1,300. (We use our Rayburn for cooking and domestic hot water all year round, and are miles from the nearest gas main.)

And the signs aren't encouraging. In January, oil prices were languishing at just $33, and at the end of April analysts were predicting that oil prices might reach $60 "by the end of the year". And for oil prices to climb so fast -- up 80% from their levels in January -- is frankly worrying.

Shop around

So what can consumers do?  The first thing to do is to shop around.  According to experts, many households don't do this: instead, they re-order from the same supplier, year in, year out, and so form a captive (and very profitable) market. Open the Yellow Pages, pick up the phone, and get quotes. You'll be surprised.

Helpful though this is for driving down bills, there's a catch -- particularly for customers who pay 'on account'. The price you're quoted won't necessarily be the price you actually pay. The price you're quoted is the price at the time of the phone call -- and in today's volatile markets, the price on delivery, which may be several days later, could well be several pence per litre higher.

Use the Internet

As with other bills, web-based buying can generate even bigger savings.  For example, BoilerJuice.com offers an innovative way to both shop around and get a fixed price. Better still, it pits heating oil suppliers against each other, bidding for your business.

Type in your post code, and how many litres of heating oil you're looking to buy, and BoilerJuice will instantly offer quotes from the various suppliers covering your area.

I've just done it now, while writing these words. For a 2,000 litre delivery to where we live in rural Devon, I'm presented with quotes from 4 suppliers -- the cheapest at 31.2 pence per litre, the most expensive at 34.31 pence per litre. For a 2,000 litre delivery, that's a difference of over £62.

Better still, because you pay at the time of placing the order, by debit or credit card (there's a surcharge of 1.57% if paying by credit card, though) the price you have been quoted is the maximum that you'll pay. It might be lower, but it won't be higher.

Is there a catch?  Only one, that I've been able to discover. Don't be surprised if the delivery date quoted by BoilerJuice is several days later than your usual supplier can offer. So keep an eye on the level in the tank, and order a week earlier than you otherwise would.

Bulk buying

BoilerJuice also offer three "group buying" opportunities that I like.

It automatically groups your order with all the others received that day from your immediate postcode. If there are enough orders to generate a bulk-buying discount, you'll automatically benefit from a lower delivery price.

BoilerJuice also operates periodic 'buying weekends'. Get your friends and neighbours to place orders at the same time, and you'll all likely benefit from a lower price.

And a 'community-based buying' scheme operates on a cashback principle, collectively rewarding members with £1 for every 1,000 litres bought. It's a useful way of painlessly generating funds for local village halls, churches, local sports teams, playgroups or other community organisations.

Other tips

But these aren't the only ways to save money on heating oil.  Four more handy tips are worth bearing in mind.

First, make sure that your boiler or oil cooker is properly serviced, in order to make sure that it's running efficiently. Having spotted a worrying rise in oil consumption a few years ago, a couple of simple tweaks had our Rayburn cooker and water heater running more efficiently than ever.

Second, as with other sources of heating, don't leave it running when you don't need to, and turn down the thermostat a degree or two if you can. You almost certainly won't notice the difference, and the savings can be considerable over time.

Third, don't wait to run out before buying oil. Keep an eye on heating oil prices (BoilerJuice publishes a handy chart, for example) and buy when prices are low.  We usually stock up in late summer when prices undergo a seasonal dip, for example.

Fourth, don't let your expensive oil go walkabout. Oil thefts are on the rise, say experts, and simple precautions such as a lock on the refilling cap can send thieves away empty-handed.

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