First we had toilet roll shortages, then CO2 shortages. Now petrol has become the latest commodity to inspire panic buying.
Consumers flocked to petrol stations over the weekend, with long queues forming throughout and around the nation’s cities, despite government efforts to convince the public that there is no shortage of the stuff.
What’s going on, and will things get back to normal any time soon?
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Members of the Petrol Retailers Association, which represent roughly 65% – around 5,500 – UK forecourts, say that panic buying had left the taps dry at as much as 90% of its member petrol stations on Sunday.
Many stations were forced to shut down, unable to meet demand. Oil and gas major BP said that the panic buying saw it run out of its two major grades of fuel on Sunday, forcing it and other forecourts to ration some supplies.
The panic buying and shortages come at an unsettled time for consumers. We’ve already seen a massive surge in both UK natural gas and electricity prices hitting headlines, as well as a shortage of fertilisers and CO2, which is used in the manufacture of many products.
So what is causing the problem?
The panic over petrol running out actually has its roots in the shortage of lorry drivers. Last week, BP, along with some Esso-owned Tesco Alliance stations, warned that it had been forced to close a small number petrol stations temporarily, because it did not have enough fuel delivery drivers. A combination of the usual kind of media coverage combined with a clumsy governmental “don’t panic!” response, prompted many drivers, predictably enough, to do just that. Thus we’ve had the run on petrol stations.
As a result of the chaos, almost 400 petrol stations, including Shell, Esso and BP, have introduced a £30 fuel limit to give customers a fair chance to fuel up.
How serious is the shortage and how long is it expected to last?
The reality is that there is no shortage of petrol itself, something that the big oil companies have been at pains to stress. The problem is being caused by “temporary spikes in customer demand” (panic buying, in other words) “not a national shortage of fuel”. The UK Transport Secretary, Grant Shapps, went so far as to describe the ongoing turmoil as a “manufactured crisis”.
The UK’s business secretary Kwasi Kwarteng, said: “We have long-standing contingency plans in place to work with industry so that fuel supplies can be maintained and deliveries can still be made in the event of a serious disruption.”
What measures has the government taken to mitigate the situation?
On the driver shortage side, the government has announced a temporary three-month scheme to make it easier for 5,000 foreign lorry drivers to work in the UK. The scheme is intended to ease supply chain and haulage pressures and is expected to last until Christmas Day. Up to 4,000 people will also be trained as new HGV drivers to tackle skills shortages.
On a more immediate basis, the UK has temporarily suspended competition law to allow oil companies to supply petrol stations more efficiently and swiftly. Officials said the relaxed competition measures will pave the way for the industry to share information more easily and that way fuel delivery can be prioritised to regions which are experiencing more acute shortages than other parts of the country.
Meanwhile, the army has been put on standby, with up to 150 military tanker drivers ready to deliver fuel to forecourts.
Is this the first time the government has relaxed competition rules?
No. It also relaxed competition laws in March 2020, at the depths of the coronavirus crisis. The move allowed retailers to share data on stock levels as well as share delivery vans and distribution depots, to ensure minimum disruption to vital supply chains during panic buying last year when the pandemic just kicked off.
What are the knock-on effects?
Refineries are not short of petrol so assuming the panic buying subsides – and given that the most panic-prone presumably have full tanks by now – it is likely that the acute shortages will end soon. That said, consumers may still suffer short-term disruption (to lots of goods) while the lorry driver shortage still persists.
In short, there’s no need to panic. However, petrol may become more expensive in the coming weeks and months, for the entirely unconnected reason that the price of crude oil has been going up sharply in recent days.
Saloni is a web writer for MoneyWeek focusing on personal finance and global financial markets. Her work has appeared in FTAdviser (part of the Financial Times), Business Insider and City A.M, among other publications. She holds a masters in international journalism from City, University of London.
Follow her on Twitter at @sardana_saloni
December NS&I Premium Bond winners revealed - have you won the jackpot?
Two Premium Bond holders are now millionaires as NS&I reveals December winners. Find out if you’re one of them
By Vaishali Varu Published
Lloyds, Halifax and Bank of Scotland to shut another 45 branches
Lloyds Banking Group, which includes Halifax and Bank of Scotland, is set to close a further 45 branches in 2024 - find out if a branch near you is closing.
By Vaishali Varu Published
UK wages grow at a record pace
The latest UK wages data will add pressure on the BoE to push interest rates even higher.
By Nicole García Mérida Published
Trapped in a time of zombie government
It’s not just companies that are eking out an existence, says Max King. The state is in the twilight zone too.
By Max King Published
America is in deep denial over debt
The downgrade in America’s credit rating was much criticised by the US government, says Alex Rankine. But was it a long time coming?
By Alex Rankine Published
UK economy avoids stagnation with surprise growth
Gross domestic product increased by 0.2% in the second quarter and by 0.5% in June
By Pedro Gonçalves Published
Bank of England raises interest rates to 5.25%
The Bank has hiked rates from 5% to 5.25%, marking the 14th increase in a row. We explain what it means for savers and homeowners - and whether more rate rises are on the horizon
By Ruth Emery Published
UK wage growth hits a record high
Stubborn inflation fuels wage growth, hitting a 20-year record high. But unemployment jumps
By Vaishali Varu Published
UK inflation remains at 8.7% ‒ what it means for your money
Inflation was unmoved at 8.7% in the 12 months to May. What does this ‘sticky’ rate of inflation mean for your money?
By John Fitzsimons Published
VICE bankruptcy: how did it happen?
Was the VICE bankruptcy inevitable? We look into how the once multibillion-dollar came crashing down.
By Jane Lewis Published