The situation in the Middle East has caused international gas and oil prices to rise sharply. GB sources a relatively small proportion of its oil and gas from that part of the world, so there is no risk to security of supply at present. But because oil and gas are traded globally consumers in Scotland are not insulated from price increases such as those observed in recent weeks.
The impact for consumers has been immediately evident in some contexts, not least at the petrol pump, where fuel costs have risen sharply.
Heating oil customers have also started to experience significant price rises. There are approximately 142,000 households in Scotland that use oil for heating according to the latest Scottish House Condition Survey. For those customers that now need to refill, prices are approaching double what they have been in the recent past. Similar dynamics are likely to affect LPG and biogas customers, of which there are roughly 27,000 in Scotland.
We are pleased the UK Government has already announced that heating oil, LPG and biogas customers will receive financial support. And that the Scottish Government has announced they will be providing additional funding.
The total support being made available to consumers in Scotland is £10m. If this is split between all relevant customers equally, the support is likely to be shallow – it would equate to roughly £60 per household. A fairly typical tank size of 1000 litres could currently cost over £1600 to fill. It’s critical, therefore, that the funding is targeted at those consumers that most need it to ensure that it makes a meaningful difference. We understand this issue is being looked at and we are working with the Scottish Government to ensure this is the case for consumers in Scotland.
In the longer term, the best outcome is likely to be to help heating oil, LPG and biogas customers to switch to alternative fuels. Several schemes, such as the boiler upgrade scheme, already exist to ensure households are supported with the cost of this transition. There should be a concerted effort on the part of governments and industry to raise consumer awareness of the existence of these schemes, and greater encouragement and help for consumers to switch.
Heating oil customers are among the first, but unlikely to be the last, to see price increases, as the situation in the Middle East continues.
Heat network customers and small businesses could also be impacted. There is no price cap for these customers, there is less publicly available pricing information, and existing contracts will come to an end at different points in the year. It is therefore difficult to say with any certainty how much any increase might be or when it might occur.
It is therefore critical that governments at a UK and Scottish level engage now with industry to understand the likely scale and timing of price increases, to determine whether support is needed in these sectors too and to develop plans for delivering that support as quickly as possible if it is required.
Most other domestic customers in Scotland are protected by Ofgem’s price cap. The current cap runs until the end of June, so prices won’t increase before then.
The price cap is calculated in part by observing wholesale gas prices within a set period before a new cap level takes effect. We will know what the price cap from July will be towards the end of May. It is difficult to predict what may happen to wholesale prices between now and then. The duration of the conflict in the Middle East is unknown, and so too is the duration and scale of the impact on gas prices.
Against this backdrop, it is critical for governments to be preparing for a range of scenarios. This means doing work now to develop potential financial support packages for consumers in the event that they are needed.
Following Russia’s invasion of Ukraine, and the resultant energy price spikes, there was no credible alternative for governments but to offer support to all households. There was insufficient time, and the mechanisms were not in place, to target funding at specific groups of consumers that most needed it. This meant the package was both expensive and didn’t give proportionate support to the most in-need households.
The ambition should be to do better this time around.
Fortunately, we are entering the warmer months of the year, when household gas usage tends to be lower. That means there is a window of opportunity over the next 6 months to sensibly prepare for different eventualities. The UK Government should, in conjunction with devolved governments, industry and consumer groups, immediately kick off work to examine how to most effectively identify the households most in need of financial support and to set up the delivery mechanisms for providing support to these consumers in the event that it is needed.
Between 2022 and 2023, typical household electricity and gas prices rose by thousands of pounds. The wholesale price increases we have seen over the last three weeks would, if carried over into the next price cap period, be far smaller by comparison. Hopefully that will remain the case. But it is incumbent on governments to use the next few months wisely, to quickly deliver well-targeted support to those consumers who need it now and to put in place robust, well-designed arrangements to protect wider consumer groups if the current situation worsens.
Background
Consumers who need advice and information can report any issues to Advice Direct Scotland via consumeradvice.scot or by calling 0808 164 6000.
In 2025, approximately 11% of total imported oil and associated products were from Saudi Arabia, Kuwait and the United Arab Emirates. Source: UK government Energy Trends statistics. 2% of imported natural gas was from Qatar. Source: UK government Energy Trends statistics.
The total announced support of £10m, if split equally between the estimated 169,000 customers that use heating oil, LPG and biogas, would amount to £59.16 per household.