(Bloomberg) — The U.K. government was in the spotlight Friday, confronted by the twin threats of soaring energy bills and the non-delivery of fuel to some retail service stations.
BP Plc and Exxon Mobil Corp.’s U.K. unit both said Thursday that a shortage of truck drivers was hampering deliveries of fuels to some locations. Transport Secretary Grant Shapps told the BBC on Friday that the U.K. is not ruling out relaxing immigration rules for truck drivers, or even deploying the military.
Still, the announcements saw a sharp increase in queues at some filling stations, with U.K. petroleum industry trade groups seeking to quell concerns about availability.
The wider energy crisis has pushed smaller power providers out of business, affecting millions of customers. Larger rivals, being asked to take on their customers, want the government to backstop what might otherwise be a very unprofitable process.
Key insights:
- Windier weather, new power cable from Norway to alleviate some pressure in U.K. energy market
- Retail fuel supply issues seen concentrated in London and the south east of the U.K.
- The Times reported Thursday that at least 50 of BP’s network of U.K. service stations are short of at least one grade of fuel
- Benchmark European natural gas prices up slightly at about 70 euros per megawatt hour on Friday, having more than tripled this year
Shells Sees Tight Gas Market Through 2025 (12:02pm U.K.)
Royal Dutch Shell Plc expects the global natural gas market to remain tight through 2025, according to a note from Jefferies, citing a sell-side event with the company.
According to Shell, the price environment for term contracts is improving and “it is a seller’s market again,” as buyers realize the importance of stable, reliable long-term supply, the note said. Shell has oriented its business to benefit from attractive gas-market fundamentals, but current conditions are more extreme and have developed more quickly than expected.
Drivers Shouldn’t Worry About Fuel Shortages: RAC (10:57am U.K.)
“Drivers should not be concerned about fuel supplies running low,” said Simon Williams, a spokesman for automotive services group RAC. “There remains an abundance of forecourts with plenty of fuel to go around.”
Separately, retailer Sainsbury’s has said there has been no disruption to fuel supplies at its stations.
Driver Shortages Aren’t Unique to Fuels, Says Oil Industry Group (10:52am U.K.)
The truck-driver shortages that have led to some of Britain’s service stations running low on fuels “are not unique to the downstream sector but are being seen across the economy,” according to a spokesman for the U.K. Petroleum Industry Association.
“Fuel is currently getting to the vast majority of consumers,” he said. “The sector will keep working to ensure that remains the case.”
U.K. Fuel Retailers See Ample Stocks (9:57 a.m. U.K.)
Fuel retailers downplayed the extent of the disruption from a shortage of truck drivers, saying temporary delivery delays are confined to one region and very few stations being forced to close.
“Cases of complete forecourt stockouts have been rare so the resilience of retail fuels is not in question,” Gordon Balmer, executive director of the Petroleum Retailers Association, said in an emailed statement. “Some sites are confirming delayed deliveries” but “any issues appear confined to London and the South-East and appear temporary by nature.”
Iberdrola Boss Says Energy Crisis to Normalize in 5-6 Months (9:55 a.m. U.K.)
The energy crisis in Europe and the U.K. is being driven by the price of gas, and the situation will normalize after prices go down in five to six months, Iberdrola’s Chief Executive Officer Ignacio Galan said on Bloomberg TV on Friday.
The Spanish company, which owns Scottish Power, says utilities will ensure supplies to U.K. customers as the failure of small suppliers forces millions of customers to switch providers: Galan.
The rise in carbon prices isn’t to blame for the energy crunch, Galan said, adding that Europe is committed to its decarbonization strategy and the energy crunch won’t derail it.
U.K. Could Relax Visas, Use Soldiers for Driver Shortage (9:07 a.m. London)
The U.K. government is “moving heaven and earth” to tackle the problem, Transport Secretary Grant Shapps told BBC Radio on Friday. “We will do whatever is required in order to make sure there are sufficient drivers.”
A lack of drivers has already left supermarkets around the U.K. unable to fill their shelves.
Asked specifically whether soldiers could drive fuel trucks if supplies continued to be hit, Shapps told BBC Breakfast: “With regards to things like whether there’s a role for the military, obviously if there is, if that can actually help we will bring them in.”
Windy Weather, New Cable (6 a.m. U.K.)
It’s not all bad news for U.K. Energy supplies. The wind is going to blow again next week, and for a few weeks after, and the world’s longest sub-sea cable will start delivering Norwegian power from Oct. 1
Those are helpful developments, but they fall a long way short of rectifying the U.K.’s underlying energy crisis
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