ValueOils.com customers in Northern Ireland may have recently received an e-mail detailing our new pricing policy. This change is part of our plan to combat fuel poverty, an issue we previously addressed and considered plans for solving on our blog. ValueOils.com’s new pricing policy is a solution to the problems posed previously that will break ground in providing the most affordable fuel possible for low-income families. In response to the interest generated by this alternation, we aim to answer questions and concerns and to shed light on what this change means in this article.
Background to Fuel Poverty
The definition of fuel poverty relies on a ratio between fuel costs and income. In general, fuel poverty can stand to mean that a household spends at least 10% of its income on fuel.
What fuel poverty means for an average consumer is that a significant proportion of funds are spent on buying small amounts of fuel and regularly, as they cannot afford to buy large amounts of fuel at once. This can be problematic considering the traditional pricing methods for home heating oil companies – households which don’t have the money to spare are required to pay more for the same amounts of fuel (when spread across more deliveries – ie 3 x 300 litre will generally cost more than 1 x 900 litre delivery).
In 2011, it was estimated that 42% of households in Northern Ireland suffered from fuel poverty – as many as 300,000 homes. However it’s not just Northern Ireland – fuel poverty affects the whole of the UK, with as many as 4.5 million households. The statistics for fuel poverty are dizzying.
Traditional Oil Distribution
It is, almost without exception, the case for home heating oil suppliers to price their orders based on the amount of fuel ordered. In other words, the pence per litre rate will vary for different order sizes. Large orders traditionally have a lower pence per litre rate, while smaller orders tend to be more expensive to compensate for the higher travel costs in proportion to the order’s profit.
For example, for traditional oil suppliers – and until recently, ValueOils.com NI used quantity price bands. –This meant that an order for 300 litres compared to an order for 900 litres, the price of the 300 litre order would be disproportionately large. Traditionally, there would be no stated charge for delivery, but the delivery costs are incorporated into the total order price. This pricing scheme is a major contributory factor to fuel poverty!
A household that, each time it orders fuel, cannot afford the example 900 litre payment must settle for the smaller 300 litre payment. When this amount of fuel is used up, they must purchase again, and the chances are they still don’t have enough disposable income to buy a large supply. This means that this buyer ends up spending far more for the same amount of fuel than someone who buys in instalments of 900 litres.
Almost every oil supplier, wherever you live – Northern Ireland, Scotland, England or Wales – uses this pricing system, which is strictly disadvantageous to consumers with limited income, especially those already in fuel poverty. If you’re a buyer who doesn’t need large amounts of oil, you may have participated in or considered using something like a buying group to order oil.
Buying Groups – a partial solution to fuel poverty
ValueOils.com has previously looked into Buying Groups and Oil Clubs and their many advantages to low-income buyers. Buying Groups are communities which come together to order a large amount of fuel together for their houses or neighbourhood. The traditional advantages of this option are:
- Reduces the overall cost of the order – the pence per litre is lower for large amounts
- Local Community – provides a platform for involvement
- Reduces CO2 emissions – less deliveries to different houses, as there is only one delivery day for the combined community
Buying groups are an efficient measure for preventing or lessening the effects of fuel poverty – they are a means of addressing the contradictory traditional heating oil pricing system by taking advantage of the lower price per litre for larger orders.
Such options have their restrictions. If only a small amount is delivered to each person in a buying group, it may not be long before an order is needed again. Individual heating prices can also be very competitive in Northern Ireland and buyers may feel tempted to get a better deal this way. There is also the risk of ordering a bulk amount at a time when heating oil is more expensive, thus getting a bad deal. Most of these problems can be associated with trying to organize a large group of people. In other words, while this can work, there should ultimately be a better option for buying small amounts of heating oil. This is why we consider ValueOils.com’s new pricing policy to be a good solution for buying individually.
ValueOils.com’s New Pricing Policy
Our new policy aims to counteract fuel poverty in Northern Ireland by making purchases more accessible and less unfair for limited income buyers, while still maintaining excellent value for large orders.
We can outline the new policy as follows:
- There is no margin added to fuel prices. The delivery cost, instead of being ‘hidden’ as an amount added to the fuel price quote, is taken out of the quote and a set standard charge identical for all customers of £19.90, no matter the travel distance.
- No matter what the size of order, the price per litre is exactly the same.
These changes have great advantages compared to traditional pricing methods:
- Combats fuel poverty – buyers with limited incomes aren’t charged a higher rate and get the same price per litre as someone buying more.
- Often cheaper – the delivery price is ValueOils.com’s profit for each order, meaning we can focus on making the oil price itself as cheap as it can possibly be for you.
- No ‘hidden’ costs – The oil quote price is exactly what you pay for the oil and the delivery charge is exactly what you pay for delivery. Nothing is added to either price.
- Straightforward – there’s no longer any need to quote different amounts to see which one you’ll get the best deal with. Order exactly as much as you need for a fair and even price.
Don’t forget – ValueOils.com also operate a ‘Pre-Payment Scheme’ which enables you to set money aside each month in advance of your order – helping you to plan in advance and spread the cost of your heating oil purchase.
We are happy to hear from you
ValueOils.com remains committed to providing the best prices possible for home heating oil, and we are confident that our new pricing policy will both save you money and start to mend the gap between NI households in fuel poverty and homes which can afford to buy large individual orders of oil, and we think other suppliers may decide to follow us after this step forward.
While we hope we have cleared some of the confusion, we would still like to hear your thoughts and feedback about our new policy. To all our Northern Ireland customers, we recommend getting a quote today to see if our new prices can benefit you.