Spiralling fuel prices could bring UK to a standstill

By Gareth Roberts
|
17 December 2010

The UK could be set to experience strike action following the announcement that fuel prices have today reached a new record high of 122pence per litre (ppl), warns fuel card reseller The Fuelcard Company.

UK petrol car owners are now spending a combined total of £8m a day more on fuel than a year ago, that’s £7 more per tank than December 2009. Diesel, which is still some way off its all-time record high, has risen 3.12p a litre over the last four weeks and now costs an average 126.19ppl.

Rises in oil prices on the world market, which have broken through the $90 a barrel barrier, are coupled with a New Year’s 1p rise in fuel duty and 2.5% increase in VAT, adding a combined 2.5ppl to fuel.

With the International Energy Agency predicting demand for oil will rise of the next few months, partly due to the cold weather, city analysts believe the price will top $100 a barrel within months.

That’s led to organisers of the fuel strikes in 2000 warning similar protest action could be on the cards in 2011, claims The Fuelcard Company.

“The fleet industry simply can’t sustain such massive increases to the day to day running of their businesses,” warns Jakes de Kock, managing director of The Fuelcard Company.

“Fleet managers feel let down by a Government who pledged a fuel stabiliser scheme to protect them by reducing tax if oil prices rose sharply, which has failed to materialise. They feel it’s time they take action into their own hands.”

The September 2000 fuel protests saw fuel refineries and distribution depots blockaded and, within days, created a fuel crisis that paralysed the UK’s critical infrastructure bringing the country to a virtual halt.

The financial impact of the week-long fuel drought was estimated at close to £1 billion.

“The impact of such strikes will resonate across the entire UK economy – the price of fuel doesn’t just hit British hauliers, it also hits UK competitiveness and raises the price of everything we buy in the shops.”

The Fuelcard Company is urging the Government to reconsider its introduction of additional fuel duty and identify ways to assist the UK’s hard pressed fleet industry before it’s too late.

More articles on:

fuel and fuel cards

Author: Gareth Roberts

News editor

gareth.roberts@bauermedia.co.uk

01733 468314

Gareth has more than 20 years’ experience as a journalist having started his career in local newspapers in the 1990s. Prior to joining Fleet News in 2008, he worked in the public sector as a media advisor and is currently news editor at Fleet News.

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davidraistrick7392 - 20/12/2010 12:03

I think the impact of a 1p duty rise and additional 2.5% vat is worse than your article suggests. It increases todays average Diesel price of 126.19ppl to 130.37ppl, an increase of 4.18ppl.
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FleetEnergyWatcher - 20/12/2010 12:06

Fleets are simply going to have to develop strategies to deal with structurally higher oil prices over sustained periods. The world oil price has doubled in the last 10 years but oil supply has barely increased. Since every barrel of oil is traded many times over between the time it is extracted and the moment it is finally burned, this is a recipe for extreme price volatility, as we saw in 2008-2009. The Government is wise to be cautious about a fuel price stabiliser, since it would very easily morph into full-on centralised price control. That would create shortages across the UK, as world refineries diverted output to more profitable markets. Be careful what you wish for. For commercial fleets, the situation is now very tough (not forgetting that fuel costs can be set against tax on profits, as long as the business is profitable). But before anyone gets too carried away by the prospect of a repeat of the 2000 fuel protest, remember that the ringleaders then were mainly farmers, who are allowed to use low-duty 'red' diesel in their businesses. The problem they face when oil prices take off is that the smaller proportion of duty means that the increase in the underlying price of oil has a bigger *proportional* impact on their fuel bills than on those of road users. The fuel price situation is far more complex and intractable than many people in fleet realise. There is no 'muddle-through' option for fleets in the face of $100 oil. The Government can't save businesses from an under-supplied global market. You have to have a strategy that encompasses increasingly prolonged bouts of high-priced fuel between sudden price drops. For car fleets, where there is still a great deal of wasted mileage, a Mileage Audit system (e.g. TMC) will allow you to eliminate unproductive activity and claims. For commercial fleets, telematics and price-hedging strategies are likely to be required. Eventually, though, when the price of your fundamental input cost - fuel - is
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defender - 21/12/2010 09:50

I'm sorry, but I don't see where the 'threat' of strike action is coming from - are there militant farmers gathering outside fuel depots? I think they're more likely to be looking after their farms, and hauliers are, quite rightly, getting on with their job of delivering goods in the face of unusual weather conditions. Quite right to, and well done to them! A vague comment that 'the organisers of fuel strikes in 2000 are issuing warnings', without proper attribution, sounds to me like scaremongering. I hope I'm right but, if there is some move to bring us grinding to a standstill, let's bin it. We've all got more important thing to think about than just acting irresponsibly. As 'Fleetenergywatcher'wrote, let's find ways of using energy, including road fuel, more effectively.
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