Glad you mentioned the insualtion as was just about to suggest that. I think all new houses have to have 11 to 12 inches of it to meet new regs. I personally have 4, but will be boosting it to 8 later this year. I hope you have got double glazed windows as well, as a lot of heat is loss through there.
The price of heating oil has doubled in the past few years. When my parents had theirs put in the price was 18 pence per litre, it is now 38 pence per litre. I personally would recommend solar water heating, as a friend of mine has this, and his hot water is scalding hot and totally free. However, these can be expensive to install and you can be looking at the best part of 6 grand all told.
Your required temperature seems very high. Dare I ask what age you are, or rather why you need heating this high?