Approximately 865,000 homes across the UK are heated by oil boilers and oil heaters. With a government ban on new oil boilers set to take place in 2035, people are looking into other options that are greener, more cost effective and stand the test of time.

In this article we discuss how much oil boilers cost to run, looking into the domestic oil prices over the past year and how efficient they are. We compare this with how much heat pumps cost to run.

How much does heating oil cost?

A graph showing how domestic oil prices fluctuate over a year.

Domestic oil prices are heavily influenced by many external factors, including weather, supply and demand and conflict in oil producing countries.

This means that it is volatile – with heating oil costs over the last year ranging from £0.57 per litre in June 2023 up to peaks of £0.82 per litre in December 2023.

At the peak of the energy crisis in 2022, domestic oil prices reached highs of £1.09 per litre.

With the average oil-powered household using 1,900 litres of heating oil a year  – this volatility leads to hundreds of pounds of extra cost for homeowners that run out when the price is highest.

Annual costs for heating your home using oil.

What else influences the running cost of oil boilers?

As well as the price of domestic heating oil, several other factors influence how much an oil boiler costs to run, including:

  • How efficient your oil boiler is – old oil boilers are around 70% efficient, meaning that 30% of the energy they use is wasted before it even reaches your radiators. Modern oil boilers can be up to 90% efficient.
  • How warm you like your home – the warmer the desired temperature, the more oil you will use to heat your home.  
  • How many hours per day your heating is on – oil boilers use between 1 and 2.5 litres of oil for every hour your heating is on – so often 10 or more litres are used each day in the winter months.
Oil boilers use 10 litres of oil every day.
air source heat pump vs oil boiler
  • If your home is well insulated – poorly insulated properties can take longer to get up to temperature and don’t retain heat well, meaning boilers are switched on more often.  
  • Whether your oil boiler is serviced annually – an annual service keeps your boiler working as efficiently as possible. Without regular maintenance, heating systems can become inefficient and require unexpected expensive repairs.

How much do oil boilers cost to run?

As we have seen, oil boiler running costs are influenced by lots of factors.

For this example, we have used an average annual heat demand of 12,000 kWh, which is based on Ofgem’s typical domestic consumption values for a medium-sized 3 bed household.  We’ve used the 12-month average cost per litre of £0.70 (£0.064 per kWh) to work out how much it would cost to run different types of oil boilers and a heat pump in this example home.

Heat pump running costs compared with oil boiler running costs.

As you can see, old, inefficient oil boilers cost much more to run than air source heat pumps. Modern oil boiler and heat pump running costs are comparable at this price per litre, but would quickly move apart if domestic oil prices went up again.

Why should you replace your oil boiler with a heat pump?

There are a few key reasons to consider replacing your oil boiler with a heat pump including:

Heat pumps are lower carbon than oil boilers: Heating an average home using heating oil results in carbon emissions of 5,200kg a year. That’s more than two return flights from London to New York.

In comparison, if you replaced your oil boiler with a heat pump running on grid electricity, it would generate just 850kg of carbon emissions a year.

Heat pumps keep your home warm all day: Heat pumps work most efficiently if they keep your home between 18 and 21 degrees all day long. Oil-heated households tend to have their boilers on for around four hours a day in the winter, leading to long periods when the house gets cold again. This means that for a similar price as four hours of oil heating, you could have a warm cosy home all day long.

Heat pump running costs are more predictable than oil: In 2022, domestic heating oil prices were over £1 per litre, leading to bills that were hundreds of pounds higher for oil-heated homes. Electricity prices fluctuate too but much less dramatically, given you greater cost certainty.   

Read more reasons to replace your oil boiler with a heat pump here.

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