Submitted by Bill Fernie
2nd September 2026
For a while, there was a little hope that the worst of the heating-oil crisis might be behind us.
Perhaps oil prices would settle. Perhaps the fighting around the Strait of Hormuz would ease. Perhaps households that had delayed filling their tanks would finally get the chance to buy their winter supply at something closer to a normal price.
That hope is beginning to look rather less convincing.
Oil prices are rising again as the United States and Iran have resumed attacks and fears grow that the conflict could once again seriously disrupt shipping through the Strait of Hormuz.
Brent crude was around $95.68 a barrel on Wednesday morning, continuing the sharp rise seen after the latest exchange of attacks.
For motorists, businesses and industry, that is bad enough.
For the millions of households that depend on heating oil, particularly in rural Scotland, it is potentially much more serious.
Because winter is approaching.
And many people will soon need to make a decision which is becoming increasingly difficult:
Do I fill the tank now, or gamble on prices falling later?
The problem with waiting
There is a perfectly understandable reason why some households have been waiting.
When heating oil prices rose dramatically earlier this year, many people decided to buy only what they absolutely needed and hoped that the market would settle.
For households with enough oil left in their tanks, delaying a large purchase can make financial sense.
But that strategy depends on prices actually falling.
The latest developments in the Middle East suggest that may not happen quickly.
The oil market is now pricing in a risk premium because traders are worried about continued disruption to shipping and supplies through Hormuz.
And this is where the problem becomes particularly difficult.
Oil prices can rise very quickly when there is a threat to supply.
They do not necessarily fall at the same speed when the threat disappears.
Heating oil is different from gas and electricity
This is something that governments have increasingly recognised, but perhaps not sufficiently.
Most households on mains gas and electricity have some protection through the energy-price system.
Heating-oil users do not.
There is no Ofgem price cap on heating oil.
The Government itself acknowledged the problem when it announced more than £50 million of support for low-income households using heating oil, pointing out that kerosene prices had been particularly badly affected by the Middle East conflict.
The Government also acknowledged another problem which is particularly important in rural communities.
An oil-heated household cannot simply buy a few pounds' worth of heating oil each week.
A tank normally has to be filled with a substantial order.
That creates a large upfront bill.
A household can therefore find itself perfectly capable of paying its normal monthly bills but unable to find several hundred pounds, or more, when the tank needs filling.
That is a very different problem from simply having a slightly higher electricity bill.
Scotland has already had to step in
The Scottish Government introduced an Emergency Heating Oil and LPG Scheme after the initial price shock.
Eligible households can receive £300 of support, with payments made directly to suppliers where possible. The scheme is currently due to close on 30 September 2026, or earlier if its funding is exhausted.
That was welcome.
But look at the timing.
The scheme is due to end just as we are entering the period when households are most concerned about keeping their homes warm through the winter.
And now oil prices are rising again.
That raises an obvious question.
What happens if the energy shock lasts beyond September?
A £300 payment is help. It isn't a strategy.
This is where the Government needs to think beyond emergency payments.
A payment can help someone fill a tank.
It doesn't solve the underlying problem.
If international oil prices remain high, the household will eventually have to buy more oil.
And then more.
And then more again.
That is why the current crisis should be treated as a warning about energy security rather than simply another cost-of-living emergency.
Britain has spent years talking about reducing dependence on imported fossil fuels.
The latest crisis demonstrates exactly why that matters.
When something goes wrong thousands of miles away, the price of heating a house in Caithness can change within days.
Businesses face the same problem
The impact doesn't stop at the household oil tank.
Oil is built into the cost of moving goods, running machinery, fishing vessels, agricultural equipment, construction equipment and transporting people.
A haulage company facing higher diesel prices has to decide whether to absorb the cost or pass it on.
A farmer using diesel machinery faces higher production costs.
A fishing business has to pay more to put a vessel to sea.
A builder faces higher transport and equipment costs.
A shop receives goods which have cost more to transport.
Eventually those extra costs work their way into prices.
This is why an oil shock can become an inflation problem.
And that creates a second problem for the Bank of England
This is where our recent bond-market story connects with the oil story.
Higher oil prices can push inflation higher.
Higher inflation makes it more difficult for the Bank of England to cut interest rates.
And if investors believe inflation will remain higher for longer, they can demand higher yields on government bonds.
We have therefore potentially got several pressures operating at the same time:
Higher oil prices → higher inflation → interest rates stay higher → borrowing becomes more expensive.
And alongside that:
Higher government borrowing costs → higher debt-interest payments → less room for tax cuts or public spending.
This is why the latest oil-price increase is more significant than simply paying a few pence more at the petrol pump.
The real danger is a prolonged shock
A short-lived increase in oil prices is painful.
A prolonged increase is much more damaging.
If markets believe the disruption around Hormuz will last for weeks or months, businesses have to start changing their assumptions.
They may increase prices.
They may reduce investment.
They may postpone hiring.
Households may cut discretionary spending because more of their income is going on heating and transport.
That slows the economy.
And if inflation remains high at the same time, the Government and Bank of England have fewer easy options.
This is the classic stagflation problem: weak economic growth combined with persistent inflation.
Britain experienced something similar during previous oil shocks.
It is precisely the combination policymakers want to avoid.
So what should governments actually do?
This is where the debate needs to become more serious.
The Government has already provided emergency financial assistance for heating-oil users.
It has also announced measures intended to accelerate domestic clean energy, including solar and renewable generation, explicitly linking energy security to reducing dependence on international fossil-fuel markets.
Those are important measures.
But they do not solve the immediate winter problem.
Nor do they provide an obvious answer for businesses facing higher fuel costs.
A serious plan needs to cover both the short term and the long term.
In the short term, governments need to consider whether existing heating-oil support should be extended if the market remains exceptionally expensive.
There is also a strong case for looking at whether support should be triggered by a defined price threshold rather than simply being available for a fixed period.
If heating oil remains exceptionally expensive in October or November, why should assistance automatically disappear simply because the calendar says September?
What about a strategic approach to heating oil?
There is another question which rarely gets enough attention.
Britain has around 1.5 million households using heating oil, according to the Competition and Markets Authority, and those consumers do not have the same protections as gas and electricity customers.
That is a very large number of households.
Yet heating oil is still treated rather like an ordinary commodity purchase.
For people in rural areas, it isn't.
It is an essential heating fuel.
There may therefore be a case for governments examining whether rural heating-oil users should have some form of permanent protection against extreme price shocks.
That doesn't necessarily mean imposing a conventional price cap.
It could involve targeted payments, emergency assistance automatically triggered by exceptional prices, stronger consumer protection, or measures to encourage more competitive purchasing and storage.
Scotland has another problem
Scotland has large numbers of households in areas without access to mains gas.
That means the problem is particularly acute in places such as the Highlands and Islands.
The Scottish Government has recognised this and introduced its emergency scheme.
It is also considering a permanent heating-oil price checker following concerns about prices and consumer protection.
But there is a bigger question.
Should Scotland have a long-term rural energy strategy which recognises that households without mains gas face a fundamentally different energy market?
At present, much energy policy is designed around the assumption that people can move between gas and electricity.
That assumption doesn't work particularly well in remote rural areas.
The heat-pump answer isn't as simple as it sounds
Governments will inevitably point towards moving away from oil heating.
And in the long term that is probably unavoidable if Britain wants to reduce its exposure to international oil markets.
The UK Government has increased support under the Boiler Upgrade Scheme for some oil-heated homes, with grants now reaching £9,000 for eligible heat-pump installations.
But there is a huge difference between saying:
"You should eventually move away from heating oil."
and actually making that affordable and practical.
An older rural house can require substantial work.
There may be insulation improvements required.
There may be electrical upgrades.
There may be difficulties with installing equipment.
And, most importantly, the household needs to find the money in the first place.
For many people, the transition cannot happen overnight.
Businesses need a plan too
The same applies to businesses.
Telling a haulage company, fishing business, farm or construction company that it should eventually move away from fossil fuels doesn't solve the problem of today's fuel bill.
Businesses need predictable energy costs if they are going to invest.
They also need confidence that government policy won't change every few years.
A serious energy strategy therefore needs to provide a pathway rather than simply a series of emergency announcements.
The Government can't control the oil price
There is an obvious response from ministers.
Britain cannot control what happens between the United States and Iran.
It cannot determine whether ships can safely pass through Hormuz.
And it cannot set the international price of crude oil.
All of that is true.
But governments can decide how exposed their citizens and businesses are to an international price shock.
That is the distinction which matters.
If Britain remains heavily dependent on imported fossil fuels, an international crisis automatically becomes a British cost-of-living problem.
If more energy comes from sources which Britain controls, the vulnerability is reduced.
That doesn't mean renewable energy makes Britain immune from every energy-price increase.
It doesn't.
But it can reduce exposure to global oil and gas markets.
The winter question is now becoming urgent
For households with oil heating, the clock is ticking.
The question isn't whether oil prices will eventually fall.
They probably will at some point.
The question is when.
Nobody knows.
If the conflict around Hormuz settles quickly, prices could fall sharply.
If the disruption continues, they could go considerably higher.
That leaves households facing an uncomfortable gamble.
Buy now at a high price and protect yourself against another rise.
Or wait and hope the geopolitical situation improves.
For someone with a full tank, that is a manageable decision.
For someone looking at an almost empty tank in November, it could become a crisis.
Britain needs more than another emergency payment
The current situation should be a wake-up call.
The Government has already shown that it can produce emergency support when prices explode.
Scotland has done the same.
But the question now is whether they are prepared to develop a proper long-term plan for energy shocks.
That plan should recognise the special position of rural households using heating oil.
It should consider how businesses can be protected from extreme short-term energy shocks without simply transferring every cost to taxpayers.
It should accelerate domestic energy production.
It should make the transition away from oil heating financially realistic.
And it should recognise that energy security is not simply an environmental issue.
It is an economic issue.
It is a household issue.
It is a business issue.
And increasingly, it is a national security issue.
The warning from the oil market
The latest rise in oil prices may eventually prove temporary.
We should hope it does.
But governments shouldn't wait to find out.
The lesson from the past few months is becoming painfully clear.
When trouble develops around the Strait of Hormuz, the effects are felt not only by oil traders in London and New York.
They are felt by the pensioner in Wick looking at an empty heating-oil tank.
By the farmer filling a tractor.
By the fishing boat taking on fuel.
By the haulier filling a diesel tank.
By the business deciding whether it can afford to employ another person.
And eventually by every household when higher transport and production costs work their way into prices.
The question is no longer whether Britain can afford an energy shock.
It is whether Britain has done enough to make sure the next one doesn't hurt quite so much.
So far, the answer looks rather like this:
We have emergency payments. We have long-term ambitions. What we still don't seem to have is a convincing plan for the gap between the two.