How to Resolve Britain’s Fuel Shortage: What Can and Can’t Be Done
(Bloomberg) -- The U.K. government has four key tools at its disposal to help it tackle the fuel delivery crisis that’s left filling stations dry and motorists queuing for hours. Of all the choices, involving the military appears to offer the quickest fix, writes Bloomberg oil strategist Julian Lee.
The problem isn’t a shortage of fuel, but an inability to get it to where it’s needed to meet demand. That job has been made more difficult by panic buying the erupted soon after the delivery bottleneck became public knowledge.
The Department for Business, Energy and Industrial Strategy published a summary of response tools available in a national emergency plan for fuel. That document lists five measures to maintain fuel supply, of which only four appear applicable to the current situation.
1. Downstream oil industry protocol
This gives the fuel distribution industry temporary exemption from the Competition Act 1998, allowing participants to share information and jointly plan and co-ordinate deliveries.
The protocol has been implemented, which should help to allocate available supplies across the country. It will do little to boost the overall volume of fuel that can be delivered but may help deal with the most acute regional shortages.
2. Relax drivers’ working hours
This can only be requested by industry, usually in response to a specific incident. It must be approved by the Department for Transport and would be limited to specific transport operations for a limited time period.
This could, in theory, provide a quick solution to the problem. However, companies will be extremely reluctant to take this step, as none would want the publicity that would be associated with a possible accident involving a driver working longer-than-normal hours.
3. Reserve tanker fleet
The government has access to a reserve fleet of fuel tankers “that can be deployed at short notice to provide additional capacity.” The BEIS said in a 2017 document that it had procured access to a fleet of 80 vehicles for this purpose.
However, without additional drivers, this tanker fleet cannot help.
4. Army drivers
According to the BEIS, the government works with the industry to maintain a capability within the armed forces to deliver fuel in the event of a serious disruption.
Calling out the military would provide a rapid boost to the number of available drivers, but was identified as “a last resort” by the BEIS.
5. Oil stocks release
This measure -- a release of oil stocks -- is the one that doesn’t seem to solve the current crisis.
The U.K. holds emergency inventories as part of its obligation as a member of the International Energy Agency. These can be released to provide additional supply.
Since the problems faced by the U.K. are in getting fuel from the oil refineries to the filling stations -- not an overall supply shortage -- it’s hard to see how this step would help.
Easing restrictions on foreign drivers:
- The government has said it will issue 5,000 short-term visas to foreign drivers, but they will only be valid until Christmas Eve. With a Europe-wide driver shortage and little sympathy in Europe for the U.K.’s plight after Brexit, the country may struggle to entice overseas drivers to apply.
Persuading qualified drivers out of retirement:
- Truck drivers who have recently retired are seen as a possible boost to the workforce in the short term. However, incentives in the form of higher pay or better conditions are likely to be needed to entice them back to the workplace. It could provide a quick solution.
Providing more tests to get people qualified:
- About 45,000 tests to qualify to drive heavy goods vehicles were lost during the pandemic, contributing to the current driver shortage. Boosting the number of tests available ought to raise the number of qualified drivers. But, with training programs likely also disrupted by social distancing rules, the boost isn’t likely to happen fast enough to solve the immediate problem.
- The panic buying may start to ease now that drivers have filled up their tanks. But if the government isn’t seen to be acting to boost the flow of fuel to forecourts, there’s a real chance that the panic will persist, elevating buying in a market that is already seeing driving back above pre-pandemic levels.
Although it’s the last resort, calling in the army may be the only quick way to help fix the fuel delivery crisis and ease the panic.
©2021 Bloomberg L.P.