U.K. Drivers Face Higher Petrol Prices as Troops Deployed

Written by
Isolde MacDonogh
Written by

Isolde MacDonogh

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(Bloomberg) -- U.K. drivers head into a second working week of fuel shortages, with the threat of higher prices adding to pressure as the government deploys army personnel to ease the crunch.

The Royal Automobile Club warned last week that average prices could hit 143 pence ($1.9) per liter of petrol in the coming weeks, up from the 137 pence. FairFuelUK, a consumer advocacy group, said Sunday prices had risen by 4 to 5 pence since Thursday, a jump not justified by an increase in crude prices. They see a liter averaging 150 pence by the end of October, the highest on record.

Cristian Jaramillo, a worker at a London petrol station, says he's already had to raise prices this week. “They've been rising quite fast actually. I think last week I did it once and probably some of my colleagues” did too.

The government has struggled to show it has a grip on the crisis, with images of petrol queues threatening to undermine confidence in the Prime Minister Boris Johnson's Conservative Party as it holds its annual conference in Manchester. The situation prompted Johnson, who led the campaign for the U.K. to leave the European Union, to temporarily ease visa restrictions for foreign truck drivers and free up 200 members of the military to help with fuel deliveries, starting Monday.

While there were some signs of improvement over the weekend, queues remained common in London and the Southeast, with some stations still out of petrol. Shell's U.K. twitter feed was filled with comments from motorists desperate to find petrol or complaining about price increases.

On Sunday morning about one in five petrol stations in the Southeast, which includes London, were out of fuel, the Petrol Retailers Association told the BBC. That was closer to 6% in the Midlands, northern England and Scotland, the association said. The PRA wasn't immediately available to comment on the price issue.

A worker at a Shell station in London on Sunday morning said that some independent stations are putting prices up by as much as 10 pence a liter. Sunday was his busiest day since the crisis started and he expected to run out of fuel in the afternoon.

Johnson on Sunday defended his government's handling of the situation in an interview with the BBC, saying fuel supply issues were “abating” and that the truck driver shortage wasn't just a U.K. issue.

“What you have got at the moment is a shortage of lorry drivers, of truck drivers that is affecting the whole world,” he said. For the U.K., he said, pulling “the big lever marked ‘uncontrolled immigration,'” wasn't the way forward.

His government has been stung by criticism that it failed to prepare for supply shortages and disruption, which have been exacerbated by the pandemic but which ministers grudgingly concede is caused in part by the U.K.'s split from its biggest trading partner.

The crisis so far hasn't seriously eroded support for the Conservatives, but that could change. The government was forced to announce tax increases to pay for its pandemic relief, which threaten to sour the mood of voters at time when prices for many goods are already rising and supply issues threaten to disrupt the Christmas holiday season.

In August U.K. inflation hit 3.2%, its highest level in over 9 years, making it increasingly likely that the Bank of England's year-end 4% forecast will be reached.