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Oil resurgence spells good news for UK farmers

As oil prices hit a four year low, UK farmers using the fuel are reaping the rewards of lower energy bills, with predictions showing this trend is set to continue in the months ahead.

Jeremy-Hawksley-oftec

Jeremy Hawksley, OFTEC director general

As oil prices hit a four year low, UK farmers using the fuel are reaping the rewards of lower energy bills, with predictions showing this trend is set to continue in the months ahead.

Over the past 12 months, oil prices have dropped by around 25% and are continuing to fall, with the cost of oil now on a par with mains gas.

Compare this with either LPG or electricity – the other primary off grid heating fuels used – and oil remains substantially cheaper, coming in at 40% less expensive than LPG and 26% cheaper than electricity, according to the most recent figures from the Sutherland Tables, a recognised independent source of data on UK comparative heating costs.

Furthermore, the prediction that oil prices will continue to fall well into 2015, outlined in a recent Department of Energy and Climate Change report on future fossil fuel prices, is already materialising, providing an even brighter outlook for UK oil users.

As oil is used in a number of farming applications including heating poultry sheds and greenhouses and drying crops, as well as powering incinerators to burn waste, the dramatic drop in price is making a tangible difference to the bottom line for many farmers.

Norfolk farmer Michael Howard, whose family has run a 600 acre arable farm in the county for more than 80 years, said: “Oil is the third biggest cost for farmers after fertilisers and spray chemicals so the significant drop in price is a huge benefit. This is helped further by the fact that we purchase our oil through the Anglian Farmers buying group which provides further savings.

“The equipment used for such processes as drying corn is also power hungry and tractors which run on diesel get through hundreds of pounds worth a day, so there are considerable savings to be had here also.”

Jeremy Hawksley, director general of OFTEC, the trade association for the oil heating industry added: “Oil prices have fallen over the past 20 months and have dropped dramatically since last September. This is clearly welcome news for all consumers but particularly those with larger oil consumption rates such as farmers.

“Although the economy is undoubtedly improving, energy prices remain a key concern for all. These latest figures should provide much comfort for those off gas grid users on oil who can be assured they are choosing by far the cheapest option.”

In addition to favourable prices, oil users have the advantage of being able to choose to buy their fuel when prices are lower, while those on LPG are often tied into long contracts which limit their options. Oil users can also purchase through buying syndicates to secure more competitive prices.

The fall in oil prices could also mean that renewable heating systems such as heat pumps, biomass and solar thermal, become a less attractive option for famers as the cost of installing and running these technologies will be more difficult to justify, even with the payments available through the non-domestic Renewable Heat Incentive.

Jeremy Hawksley continues: “Despite the Government’s claims that RHI will cut fuel costs, the widely recognised Sutherland Tables report clearly shows that oil has seen a steady decrease in price and offers a substantially cheaper heating solution than alternative technologies for those who are off gas grid.

“This will be an important consideration for the farming community which faces a volatile market with considerable cost pressures.”

The issue of oil theft has been cited by competitors as a drawback of using the fuel but in reality instances are few compared with other burglaries and falling oil prices will undoubtedly help to deter thieves further.

Jeremy Hawksley concludes: “Although oil thefts do happen, thankfully these crimes are rare and likely to become rarer still as prices fall. By taking some simple precautions such as fitting lockable caps and installing a security light, you can usually deter thieves. Electronic level gauges and alarms are also very effective in alerting someone to a sudden drop in oil levels.”

 

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