08:09
Introduction: Petrol crisis continues
Good morning, and welcome to our rolling coverage of
the world economy, the financial crisis, the eurozone, business, and the UK’s
supply chain crisis.
Britain has woken up to another day of disruption to
fuel supplies, after problems shipping petrol and diesel to forecourts led to
shortages and panic buying in recent days.
There are fears that vital services will be disrupted
as the impact ripples through the economy.
Transport groups are already reporting problems on the
roads again this morning, as queues at petrol stations with fuel for sale build
up in the early morning rush.
Southdown buses, who operate in Kent, Surrey and
Sussex, is warning of queues and delays.
RSM: Fuel shortages not a threat to the economy, yet
Tom Pugh,
UK economist at RSM, says the fuel shortages won’t cause much damage to the
economy -- as long as they are resolved quickly.
But should
they extend beyond this week, growth could be hit, he writes:
The
well-publicised fuel shortages, which have seen 90% of petrol stations running
out of fuel and hours-long queues for those that haven’t, probably won’t make
much of a difference to the economy if they end this week as is widely
expected.
But if
the pumps stay dry for much longer, then the impact of people unable to go
about their work and daily lives may join labour shortages, soaring energy
prices and a lack of shipping containers as another drag on the economy.
Companies
will suffer if employees spending hours queuing for petrol instead of working,
or can’t work at all. If delivery firms struggle, then the existing supply
chain problems will worsen.
Before
the pandemic, about 50% of workers drove to work. That figure may be a bit
lower now due to homeworking, but a large part of the workforce will still need
fuel to get to work.
What’s
more, a shortage of fuel for trucks and delivery vans risks exacerbating the
shortage of goods which has been hampering the economic recovery. This will
inevitably be a drag on GDP growth in September compared to if there were no
shortages.
Pugh
also warns that rising prices at the pumps will hit consumers (petrol prices
are the highest since 2013).
There is
also some evidence that some petrol stations are putting up prices in response
to the surge in demand.
Given
that motor fuel makes up around 2.7% of the CPI basket, a 10p per litre
increase in the price of fuel would add about 0.02 percentage points to
inflation in September. This doesn’t sound like a lot, but when inflation is
already above 3% and rising it will add to consumers’ misery.
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