On 24th February 2022, Russia invaded Ukraine. This has had a far reaching impact on the rest of the world with a sharp rise in prices worldwide across a range of commodities such as food, fertiliser, and wheat (Ukraine exports over a third of the world's wheat). However, the No.1 of these commodities affected has been fuel, including oil, natural gas and other energy products, especially across Europe as many key EU countries rely on Russia for their energy.
We wanted to take a look at the effect of Russia's invasion on fuel prices in the UK and specifically domestic heating oil, and what the future could hold for prices as winter approaches and the demand for heating oil goes up.
The UK has enough fuel:
First, let's start with some reassurances for you if you have oil central heating or use gas. Prices have settled back from the highs we saw earlier this year. But UK oil prices have historically been impacted by supply and demand globally, so are likely to rise as we head towards winter and people use more fuel to heat their homes.
Here at Northern Energy we have contracts in place with our suppliers to give us the confidence that we'll have more than enough supply to meet the needs of our customers all year round.
Also, our situation here in the UK is quite different from other European countries. Last year, the UK imported just 4% of its natural gas from Russia, while Europe imported 40% of what it needed. Certain EU countries relied on Russian supplies more than others, one in particular was Germany, with 55% of its natural gas supplied from Russia. This however, has been greatly reduced to 35% since May this year.
This means that here in the UK we are far less reliant on Russia for our gas. And it's the same story for oil, so we can weather the effect of fuel bans far better than other countries in the EU. In fact, the UK is phasing out Russian oil imports by the end of this year and is working closely with international partners to ensure alternative supplies of fuel products.
Why have prices risen?
Even though we're not as reliant here on Russia for oil and gas, world fuel prices have increased as countries seek alternative sources as Russian sanctions come into place. In the case of oil, the EU and other western allies have put a halt on all oil supply. But even though the EU wanted to do the same for gas, it was too reliant on it - as we've seen - to completely halt gas trading with Russia.
The EU has said it will reduce Russian gas imports by two-thirds within a year. In order to help achieve this, member states have agreed that over the next seven months they'll reduce Russian imported gas usage by 15%.
What does the future hold?
Unfortunately, no end in Russian hostilities seems to be in sight. However, EU countries can buy from other countries and the International Energy Agency (IEA), which works with countries around the world to shape energy policies for a secure and sustainable future, agreed on 1st April this year to make available 120 million barrels from their emergency oil stocks. There will also be more oil released to the world market by the US, with Joe Biden's administration announcing last week that it will sell an additional 20 millions barrels of oil from the Strategic Petroleum Reserve. But unfortunately prices are unlikely to fall anytime soon.
Asked about fuel costs, Stuart Illingworth, our Managing Director, who has his finger on the pulse of fluctuating oil and gas prices, said 'Fuel prices have remained at an unusually high level due to the ongoing war. This is with the background of the typically low summer demand, and means that when demand returns to winter levels, we would not be surprised if prices rise again'. He then went on to add 'Customers can mitigate this by going into winter with a full tank of domestic heating oil, and alternatively by saving for their delivery now rather than being caught out by high bills in the winter'.
How to prepare for winter:
One of the ways to get ready for rising winter fuel bills is to fill heating oil tanks up well in advance of the cold weather. We find that fuel prices start going up around autumn time, which is when temperatures start to drop, nights draw in and people turn on their oil central heating. It's also good to get into the habit of regularly checking your heating oil levels as you don't want to be in a situation where you have to 'panic buy' due to a heating oil emergency that could so easily have been avoided. A great way to keep an eye on your fuel level 24/7 is with a heating oil tank gauge which can help you monitor when your oil levels get low, and which can give real peace of mind. Our OilFox smart monitor includes a FoxRadar transmitter device which is easy to install, and provides live monitoring of the level of your heating oil tank via a simple-to-use app on your phone.
Another tip is to ensure that your home is well insulated as draughts and loss of heat lead to higher heating bills. You can get more energy saving tips in one of our blogs which is all about keeping heating costs down.
What you can be sure to depend on is that here at Northern Energy we want to help our customers however we can. As Stuart said, 'We always have, and always will, work with our customers to find solutions that suit them, whether that is spreading payments, making smaller deliveries or sharing energy saving tips. We want to be there for our customers in these difficult times'.
A great example of this is our new Flexi Saver Plan which has been recently created for customers with oil fired central heating in these unprecedented times. Designed to take the worry out of high winter bills, there are no joining fees, no ongoing charges and no cancellation costs. You just join, then start making flexible monthly direct debit payments that are then used towards your next heating oil bill. To help make your money go further, we'll also automatically upgrade you to our Premium Heating Oil which contains a heating oil additive and is more efficient in oil heating systems and more environmentally friendly than standard home heating oil. Also, as it burns more efficiently and cleaner, there's less deposit built up in your oil central heating boiler, and so less chance of problems such as potential costly breakdowns or maintenance issues. And finally, for added peace of mind, your money can be fully refunded at any time on request. Call us to find out more on 01423 770 666 or click here.