What’s causing the problems with the UK’s fuel situation?
The fuel situation and the rising cost of living has been an increasingly urgent concern for the Great British public for quite a while now. On the one hand, reading the headlines is one of the best ways to stay informed, and therefore make sure you’re staying abreast of any changes that affect you and your business. On the other hand, scrolling through headlines can be incredibly stressful, as so many of us have unfortunately found over the last two years or so.
As experts in car hire and van hire here at Intack Self Drive, we’re amongst some of the countless business that stand to be affected by any major development in the automotive world, so rest assured we’ve been keeping a close eye on the headlines ourselves!
The supply chain issues mean that you’re probably already working on adapting your own plans to cope with the incoming challenges in the coming months. But in order to properly adapt to these challenges, it’s important to understand the underlying reasons for them. There have been all sorts of theories floating round in recent weeks - some a lot less credible than others! - so to save you any potentially costly misunderstandings, here’s some background to the situation in a nutshell.
Has the fuel shortage improved since the start of the month?
Strictly in terms of long queues and panic buying, yes it has. In case you need a quick refresher on the background to what happened, a lot of it comes down to the ongoing shortage of HGV drivers. This is a Europe-wide problem, but the UK is feeling the effects particularly keenly due to the potent effect of Brexit immigration rules and the impact of Covid-19.
Back in September, this shortage prompted BP to announce that it would be temporarily closing some of its forecourts. Given the general state of the world recently, and the proximity to the Christmas season, this understandably made a lot of people nervous. One thing led to another, and within days there was nationwide panic buying, with miles-long queues at petrol stations across the country.
The situation has notably improved now with regards to the availability of fuel. Forecourt queues have largely disappeared in most regions of the country, and drivers are able to fill up more normally. The government has brought in the military to help deal with deliveries, especially in London and the South East, but it looks like the fuel shortage issue could last for some time yet - possibly into 2022.
However, many drivers are now less concerned about the availability of fuel at the pumps, and far more concerned about the price of it - especially since that’s set to continue rising.
Rising prices will remain a reality for UK motorists for the time being
As things stand, motorists can expect to see the single largest increase in fuel prices for over a decade. Experts have stressed that this phenomenon isn’t down to the lorry driver shortage so much as it’s down to heightened demand for fuel around the world. As the world attempts to bounce back from the devastating impact of Covid-19, that’s led to a spike in fuel demand that supplies are struggling to keep up with.
That demand is being reflected in the rising global price of crude oil, which is now close to a three year peak. We’re not professional economists, but to give you a general idea: at the start of this year, Brent crude oil cost about $51 per barrel. By the second week of October 2021, that figure had risen to $85 per barrel. That’s led to retailers paying more for fuel, and passing the costs on to motorists.
In particular, stocks are lower in Northwest Europe than they’d normally be at this time of year, and that’s tightening supply. There’s also a stronger demand for gasoline in the United States, which is having a knock-on effect on prices at the pumps.
And we’re sorry, but we’ve got more bad news for you: Brian Madderson of the Petrol Retailers Association said that UK motorists haven’t yet seen the full impact of these rising oil prices. According to his statement, the current average pump prices across Britain are being softened by some of the largest retailers, who typically benefit from a 3-week or 4-week lag to their delivered fuel prices.
That means that while fuel prices hit an 8-year high back in September, we could be seeing record levels by the end of this month. If you’re able, then, now is a good time to prepare your finances as best you can for another rising wave of costs in the next few months.
There’s no question that it’s going to be tough on drivers, fleet managers and private motorists alike for a little while. But while we can’t offer much help in the way of softening those finances, what we can do is provide any help you might need if you’re looking to hire a car, van or minibus for an upcoming journey. We offer short-term, long-term and Flexi-hire services at competitive rates, and with around half a century of experience, you can trust us to understand your needs and circumstances whether you’re a private customer or commercial driver. Feel free to visit our Blackburn depot, or get in touch by giving us a call on 01254 57811, and we’ll be happy to help.