(Bloomberg) — The U.K. government, already grappling with a crisis in the electricity market, is trying to stop drivers panic buying gasoline as queues build up outside some service stations in southeast England.
Prime Minister Boris Johnson has cleared the way for more foreign truck drivers to enter the country to help with deliveries, the FT reports. BP Plc and Exxon Mobil Corp.’s U.K. unit both said Thursday that a shortage of drivers was hampering deliveries of fuels to some locations.
The oil companies’ announcements saw a sharp increase in vehicles waiting to buy fuel, with U.K. petroleum industry trade groups seeking to quell concerns about fuel availability. Meanwhile, British retailers are warning of possible disruptions to Christmas deliveries if the truck-driver shortage isn’t resolved soon.
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:
- U.K. prime minister clears the way for more foreign truck drivers to enter the country to allow more fuel deliveries, the Financial Times reports.
- Industry groups seek to quell concerns about fuel shortages as queues form at filling stations
- 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
- In energy markets, windier weather, new power cable from Norway to alleviate some pressure in the U.K.
Britain to Ease Rules for Truck Drivers: FT (1:45pm U.K.)
U.K. Prime Minister Boris Johnson has given the go-ahead to ministers to relax immigration rules to allow more foreign truck drivers into the country, the Financial Times reports, citing an unidentified person familiar with the matter. Johnson has issued instructions to fix the issue, the person tells FT.
U.K. Retailers Warn of Christmas Disruptions (1:39pm London)
The U.K. has a shortage of about 90,000 delivery truck drivers, and unless more are found within 10 days, “it is inevitable that we will see significant disruption in the run up to Christmas,” said Andrew Opie, director of food and sustainability at the British Retail Consortium. That timeframe is important because retailers start to build up on Christmas supplies in October, according to the group.
The BRC, which represents 170 major retailers across multiple sectors, wants the government to create temporary work visas to allow drivers from abroad to fill the gap, Opie said.
Energy Crunch Hits British Vegetables (1:33pm U.K.)
The cost of growing young British tomatoes, cucumbers and peppers is surging, in the latest example of how the energy crunch is roiling the country’s food sector.
The vegetables aren’t suited to grow in the U.K. climate, but can flourish in heated greenhouses. While the current season for growing crops like tomatoes is drawing to a close, farmers will soon house seedlings for next year’s harvest, according to Nigel Jenney, head of the Fresh Produce Consortium.
That makes the recent spike in gas costs particularly worrisome, as the glasshouses for young plants must be heated through the winter before the weather warms. The rising energy bills are “a huge additional burden” on growers, and some might cut back or delay plantings, Jenney said.
Miners to See Long-Term Effects of Energy Crisis (1:21pm U.K.)
The unprecedented jump in power prices will hit miners for years to come because new long-term contracts will take current levels into account, an executive at Swedish miner Boliden AB said. The company just signed a new 15-year accord to supply a smelter in Norway that’s being upgraded.
“Contracts will have to be renewed sooner or later. However they are written, you will eventually get hurt because of the situation in the market,” Mats Gustavsson, vice president for energy at Boliden, said in an interview. “If you are exposed to the market, the operational expenses have of course increased.”
Some Esso Stations Still Affected (12:34pm U.K.)
A small number of Esso-branded pump stations are still impacted in some way by the disruption in U.K. fuel deliveries, a spokesman for Exxon said.
The affected stations are in the Tesco Alliance business of 200 stations, which means there’s a Tesco shop on the site. Exxon arranges supply of fuel to the Tesco Alliance outlets. The U.K. has a further 1,000 Esso-branded sites, but supply to those is arranged by other companies.
Big Queues at Filling Stations (12:25pm U.K.)
Fuel is still available — as long as you’re prepared to wait. By lunchtime in Ashford, Kent lines had formed outside outside Esso and BP outlets, while a much longer traffic queue had formed outside Tesco Extra on the outskirts of town.
It was a similar picture at West Wickham, South East London, where the line of drivers waiting to fill up at a Shell outlet blocked traffic.
Shells Sees Tight Gas Market Through 2025 (12:02pm)
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)
“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)
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 (9:57am)
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 (9:55am)
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 (9:07am)
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 (6am)
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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