Roughly four million homes in the UK sit off the mains gas grid, and a large share of them heat with oil: a steel tank in the garden, a boiler that looks much like a gas one, and a delivery lorry that turns up a few times a year to top you up. Oil heating works perfectly well, but it prices very differently from gas. You buy a whole tankful at once at a price that swings with the global oil market, the cost per unit of heat is usually higher than mains gas, and there is no monthly direct debit to smooth the lumps. This guide explains what a litre of heating oil actually buys you, how to price a year of it, and the handful of moves that make the biggest difference to the bill.
The short answer. Standard heating oil (kerosene, sometimes called 28 second oil) holds about 10.3 kWh of energy per litre. After boiler losses you keep roughly 9 kWh of useful heat from each litre. At an illustrative 70p per litre that works out at about 7.5p per kWh of heat, more than mains gas but well below standard-rate electric heating. A typical three bedroom oil-heated house gets through somewhere around 1,400 to 1,700 litres a year, so the annual heating bill often lands between £1,000 and £1,400 depending on the home and the oil price on the day you fill up.
Who heats with oil, and why the pricing feels different
Oil central heating is overwhelmingly a rural story. If your village never got a mains gas connection, your realistic options for wet central heating have long been oil, bottled LPG, or electricity, and oil has traditionally been the cheapest of those per unit of heat. The system itself is familiar: a boiler burns kerosene to heat water, which circulates through ordinary radiators and a hot water cylinder, exactly as a gas system does. From inside the house you would barely know the difference.
What feels different is the money. With mains gas you pay monthly for precisely what the meter recorded, at a unit rate the regulator caps. With oil you buy a large quantity up front at a market price nobody caps, store it in your own tank, and draw it down over months. A single 1,000 litre delivery can cost the best part of a thousand pounds in one hit, which is a real budgeting challenge for households that are not putting money aside through the year. The price you pay also depends on when you order, how much you take, and even how easy your driveway is for the tanker, none of which apply to a metered fuel.
The other consequence is that you, not a supplier, are responsible for not running dry. Letting an oil boiler suck the tank empty can draw sludge from the bottom into the fuel line and may need an engineer to bleed and restart the system. Most oil households fit a simple tank gauge or a battery monitor and reorder when they are down to about a quarter.
What a litre of heating oil is worth in kWh
To compare oil with anything else you have to get it onto the same footing as the rest of your energy, which means pence per kWh of useful heat. Two numbers do the conversion. The first is the energy content of kerosene, close to 10.3 kWh per litre. The second is your boiler efficiency: a modern condensing oil boiler runs at around 90 per cent, while an older non-condensing model might manage 75 to 80 per cent by the time it is a decade old and due a service.
Put those together. At 90 per cent efficiency each litre yields about 9.3 kWh of heat in your radiators. Divide the price you paid by that figure:
| Oil price (illustrative) | Cost per kWh of heat, modern boiler (90%) | Cost per kWh of heat, older boiler (80%) |
|---|---|---|
| 55p per litre | 5.9p | 6.7p |
| 70p per litre | 7.5p | 8.5p |
| 90p per litre | 9.7p | 10.9p |
Prices shown are illustrative examples to demonstrate the method, not current market rates; heating oil prices move daily and vary by region and order size.
For context, mains gas under the price cap sits around 7p to 8p per kWh of fuel, or roughly 8p to 9p per kWh of heat once you account for boiler losses, and standard-rate electricity is around 26p per kWh. So oil tends to land close to gas, sometimes a little cheaper and sometimes a little dearer, and comfortably below ordinary electric heating. The same arithmetic underpins every running-cost figure on this site; if it is unfamiliar, our explainer on what a kWh is walks through it slowly.
Pricing a whole year: a worked example
Start from how much heat the house needs, then convert to litres and pounds. Suppose a reasonably insulated three bedroom house needs about 14,000 kWh of heat a year for space heating and hot water combined, which is in the normal range for that size of home. With a 90 per cent condensing boiler you need 14,000 divided by 0.9, or roughly 15,500 kWh of oil energy going in. Divide by 10.3 kWh per litre and you need about 1,500 litres for the year.
Now the cost depends entirely on what you paid:
- At an illustrative 55p per litre, 1,500 litres costs about £825.
- At 70p per litre, about £1,050.
- At 90p per litre, about £1,350.
That spread, several hundred pounds on the same house for the same warmth, is the headline feature of oil heating: your annual bill is set as much by the oil price on your order days as by how you live. It is why timing your deliveries matters more here than almost any other behaviour change. A poorly insulated four bedroom house could easily use 2,000 to 2,500 litres and a small, well-insulated cottage perhaps 800 to 1,000, so treat the 1,500 figure as a midpoint, not a rule. Our guide to the cost of heating a house covers how the heat demand itself varies.
Buying oil for less
Because the fuel price dominates the bill, the cheapest litres are bought with a bit of planning rather than in a panic:
- Order in summer, not midwinter. Demand and prices generally climb through autumn into the coldest months. Filling the tank in the warmer half of the year, when you are not desperate, often catches a lower price. The trade-off is that you tie up cash in a full tank for months.
- Buy in bulk. The per-litre price almost always falls as the order grows. A 1,000 litre order is usually a good deal cheaper per litre than 500 litres, so if your tank and your budget allow it, fewer larger fills beat frequent small ones.
- Buy with neighbours. Many rural areas run oil buying groups or syndicates where households place a combined order so everyone gets the bulk rate and the supplier makes one efficient trip. Local community pages are the usual way to find one.
- Get more than one quote. Prices vary between distributors on the same day, and a couple of phone calls or an online comparison can move the figure noticeably. Avoid ordering on the coldest, highest-demand days if you possibly can.
- Do not let the tank run dry. Beyond the restart hassle, an empty-tank emergency delivery is when you have the least bargaining power and pay the most.
One caution: a full tank of oil is a valuable, stealable commodity, so a lockable cap and a tank sited away from the roadside are sensible. None of this is about a particular supplier; shop around locally and let the quotes decide.
Using fewer litres in the first place
Cutting consumption pays back the same whatever the oil price, and the levers are the ones that work for any wet heating system:
- Service the boiler every year. Oil boilers need their nozzle, filter and combustion cleaned annually far more than gas ones do. A neglected oil boiler can drift several percentage points down in efficiency, which on a 1,500 litre habit is dozens of litres wasted. The service also keeps it reliable through winter.
- Turn down the flow temperature. If your radiators get the house warm at a lower boiler flow temperature, a condensing oil boiler runs more efficiently and burns less. The principle is the same as for gas; see boiler flow temperature for how to set it.
- Insulate the fabric. Every kWh you stop losing is a litre you do not buy. Topping up loft insulation and doing the cheap rounds of draught-proofing shrink the heat demand that the worked example above is built on.
- Control the system properly. A working timer, a room thermostat and thermostatic radiator valves stop you heating empty rooms and overshooting comfortable temperatures. Heating the house to 21°C rather than 23°C is worth a meaningful chunk of the annual litres.
- Lag the hot water cylinder and pipes. Oil-heated homes almost always have a stored hot water cylinder, so a good jacket and some pipe lagging keep that heat where you want it.
You can plug any of these savings straight into the worked example: knock the heat demand from 14,000 to 12,000 kWh and the annual litres fall from about 1,500 to roughly 1,300, saving 200 litres a year for as long as you live there.
Oil versus the alternatives off the gas grid
If you are weighing up whether to stick with oil, the realistic comparisons are LPG, direct electric heating, and a heat pump.
- LPG (bottled or bulk gas) works much like oil, bought in bulk and stored on site, but per kWh it is usually dearer than oil, so it tends to be a second choice for off-grid homes rather than an upgrade.
- Direct electric heating (panel heaters, or storage heaters on an off-peak tariff) avoids tanks and deliveries but, at standard electricity rates of around 26p per kWh, costs far more per unit of heat than oil. Even on a cheaper night rate the economics rarely beat oil for a whole house. The trade-offs are covered in gas versus electric heating costs.
- An air source heat pump is the option most likely to undercut oil over time. Because it moves heat rather than burning fuel, it delivers roughly three kWh of warmth per kWh of electricity, which can bring the cost per kWh of heat into oil's range or below, while removing the tank, the deliveries and the carbon. The catch is a large upfront cost, the need for a well-insulated home and decent-sized radiators, and a sensible electricity tariff. Grants can take a serious bite out of the install price; see heat pump grants and cost and our general heat pumps explained for whether your home is a good candidate.
For many oil households the honest position is that oil remains competitive to run today, but a heat pump is the likeliest long-term replacement when the boiler eventually dies, particularly once the home is well insulated. There is no rush to rip out a working oil system; the time to plan the switch is before the old boiler fails on the coldest week of the year.
The bottom line
Oil heating is priced in litres, but you should think in pence per kWh of heat: about 9 kWh of useful warmth per litre after boiler losses, so an illustrative 70p litre is roughly 7.5p per kWh, close to mains gas and well under standard electricity. A typical three bedroom home uses somewhere around 1,500 litres a year, and the bill swings by hundreds of pounds purely on the oil price the day you fill up. That makes two habits worth real money: buy in summer, in bulk, and ideally with neighbours, and cut the heat demand through servicing, lower flow temperatures and insulation so you need fewer litres at all. When the boiler finally reaches the end of its life, run the numbers on a heat pump rather than defaulting to another oil boiler, because for a well-insulated off-grid home it is increasingly the cheaper machine to run. You can price your own appliances and heating habits with the running-cost calculator.