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News Article

The UK’s Fuel Retail Crisis

By Pedro Alcalá | Wed, 09/29/2021 - 16:46

Fuel retail stations in the UK have now entered their sixth day in a supply crisis caused by both panic purchasing and a shortage of truck drivers, among other factors. This crisis could provide an interesting parallel to Mexico's current downstream predicament.

The UK’s crisis began by government officials denying there was even a crisis to begin with. Transport minister Grant Shapps had claimed over the weekend that all reported shortages were being caused by panic buyers and that the situation would normalize on its own by the beginning of the week, since fuel stockpiling is not common in the UK. Leaders from ExxonMobil, Shell and BP, three of the most important fuel retailers in Great Britain, met with business minister Kwasi Kwarteng to receive reassurances. However, by Monday it was clear that the crisis was only getting worse, with more and more service stations having to close or be plagued by long lines of frustrated customers. BP, which operates 1,200 stations in that country, had to release a statement to make clear that a third of its stations had run out of the main fuel grades that they offered: "With the intense demand seen over the past two days, we estimate that around 30 percent  of sites in this network do not currently have either of the main grades of fuel."

The UK government has been forced to suspend its antitrust competition laws so that these companies can communicate and make plans among themselves to coordinate a stabilization of fuel supply, and even the British army has been put on standby in response to this crisis. Rising prices and panic purchases played a role in creating this situation, but another important factor has been a shortage of truck drivers to manage fuel supply logistics. According to Shapps, this driver shortage is due to the disruption that COVID-19 caused for the driver qualification process. However, he has been rebuked by critics from both within and outside the government who claim that Brexit is to blame; according to this criticism, new labour and immigration laws have forced out foreign drivers and created poor working conditions for those that remained. This criticism appears to have been confirmed by the fact that the government has now announced its plans to issue 5,000 temporary visas to foreign truck drivers.

The parallel with Mexico’s situation could be found thusly: Brexit was seen as a political move towards nationalism and sovereign oil and energy self-sufficiency, two values that have been an important element of Mexico’s government. While Mexico has experienced brief interruptions to its fuel supply in the last year, the direction of its oil and gas industry is supposed to be geared towards making those interruptions a thing of the past through energy sovereignty and energy security, two concepts that the government wants to make equal but that technically mean different things (energy sovereignty means Mexico produces all the fuel it consumes; energy security means fuel is always available). The UK’s current crisis could be interpreted as a warning that energy sovereignty can make energy security more difficult, instead of easier to achieve.

Photo by:   CFE
Pedro Alcalá Pedro Alcalá Senior Journalist & Industry Analyst